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  • 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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