The projected changes in cash during the quarter will be calculated as follows:
1-Cash Collection:
January
300000+(700000*40%)=580000
February
(700000*60%)+(800000*40%)=740000
March
(800000*60%)+(500000*40%)=680000
Total cash collection=2000000............................A
2-Inventory Purchases:
January
500000+(350000*50%)=675000
February
(350000*50%)+(425000*50%)=387500
March
(425000*50%)+(225000*50%)=325000
Total Purchases= 1387500...........................B
3-Other expenses
January 150000
February 175000
March 175000
Total 500000 ................... C
Accordingly the total change in Cash during the quarter will be A-B-C
=2000000-1387500-500000= 112500 (ANS)
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G. Prasad
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Original Message:
Sent: 10-20-2021 10:01 PM
From: Martha Zubia
Subject: CMA Part 1
Does anybody have the answer to problem 86 Section Planning, Budgeting, and Forecasting, I believe there is an error on the option for answers and I want to know if somebody has the right answer?
Planning, Budgeting, and Forecasting
86- Cooper Company's management team is preparing a cash budget for the coming quarter. The following budgeted information is under review.
January February March
Revenue $700,000 $800,000 $500,000
Inv purchases 350,000 425,000 225,000
Other exp 150,000 175,000 175,000
The company expects to collect 40% of its monthly sales in the month of sale and 60% in the following month. 50% of inventory purchases are paid in the month of purchase, and the other 50% in the following month. All payments for other expenses are made in the month incurred. Cooper forecasts the following account balances at the beginning of the quarter.
Cash $100,000
Accounts receivable 300,000
Accounts payable (Inventory) 500,000
Given the above information, the projected change in cash during the coming quarter will be?
Thanks
Martha Z
Accountant