# CMA Study Group

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## CASH COLLECTION & DISBURSMENT

• #### 1.  CASH COLLECTION & DISBURSMENT

Posted 06-07-2022 01:40 AM
Dear Friends,

I am really confused about this question. Anybody to help me?

Regards

The following information concerns Montero Corp.
Purchases
Sales
January
\$42,000
\$72,000
February
48,000
66,000
March
36,000
60,000
April
54,000
78,000
Collections from Montero Corp.'s customers are normally 70% in the month of sale, and 20% and 9%, respectively, in the 2 months following the sale. The balance is uncollectible. Montero takes full advantage of the 2% discount allowed on purchases paid for by the 10th of the following month. Purchases for May are budgeted at \$60,000, and sales for May are forecasted at \$66,000. Cash disbursements for expenses are expected to be \$14,400 for the month of May. Montero's cash balance at May 1 was \$22,000.
What was Montero's cash balance on April 1, assuming cash disbursements for expenses increased 20% from April to May?

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TIMUCIN ONER
Director/Manager
ANTALYA
Turkey
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• #### 2.  RE: CASH COLLECTION & DISBURSMENT

Posted 06-21-2022 07:17 AM
Hello, Mr. Timucin oner

The solution is to work backward from the \$22,000 cash balance on May 1 by deducting collections and adding disbursements for April. The collections for April were

•                         Montero Corp.'s
Expected Cash Collections For the Month of April
Month               Sales                 %                       Expected Collections
April                78,000                  70%                              54,600
March             60,000                  20%                              12000
Feb                66,000                   9%                                 5940
Total expected cash collections     72,540

The disbursements for April were:

Prepare a schedule of expected cash disbursements for April
Montero Corporation

March Purchase (to be paid in April)                \$36000
Less: 2% discount allowed on Purchase         (720)
Net Purchase           \$35,280

Plus: Cash expenses (\$14,400 ÷ 120%)         12,000

Total disbursement for April                              \$47,280

If collections exceeded disbursements by \$25,260 (\$72,540 – \$47,280), but the ending cash balance was only \$22,000, the beginning balance must have been \$(3,260) [\$22,000 – \$25,260 net collections].

Answer is 3,260 is beginning balance of April 1

I hope you understand.
Please feedback to me!

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[Shaik] [Sumair] [Receivable Accountant]
[Receivable Accountant ]
[Printech Middle East LLC]
[Dubai]
[United Arab emirates][shaiksumair7076@...]
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