CMA Study Group

 View Only

  • 1.  Hello

    Posted 06-24-2022 06:47 AM
    Could anybody explain please because i solve it like below:
    Cash 20,000000
    Cash collected from previous year 216,000,000
    Cash collected from current year 26,000,000
    Expenses    240,000,000  + 30,000,000

    Balance = -8,000,000


    image.png


  • 2.  RE: Hello

    Posted 06-25-2022 02:52 AM

    Hi! 


    It's easier to understand if you make a T Account. 


    You have:
    beg Balance                       20M
    10% from previous year     24M
    90% from current year       234M
    Total Cash                          278M

    Less: 
    Current Year's expenses    (240M)
    Capital requirement            (30M)
    Balance Cash                      8M


    Company policy is to maintain 10M, so you need outside financing of 2M get to that amount. 

    The 216M(90%) that you added was already collected last year(Y1) and probably spent also in that year since you have Y1 ending cash balance of 20M. You were required to solve of Current Year(Y2).


    Hope this helps. 



    ------------------------------
    Joel Deen Cacho CPA
    Accountant
    Fereej Al Soudan North
    Qatar
    ------------------------------

    Original Message


  • 3.  RE: Hello

    Posted 06-25-2022 05:09 AM

    Hi, 
    See here 10 % of sales collected next year means 90% is collected in the current year.

    So out of the anticipated sales of $260 m 90% is collected in the second year and 10 % of $240 is also collected in the second year plus $20 m Op bal.

    So total $278 M less the exp of $270. So bal is $8m But the company requires 10 M min bal each year.

    So diff amt of $2m needs to be financed externally.($10 - $8).

    ------------------------------
    VIMAL RAJ CHAKKINGAL
    Student
    PALAKKAD
    India
    ------------------------------

    Original Message