On April 1^st, your firm had a beginning cash balance of $280. Your sales for March were $460 and your April sales were $510. During April you had cash expenses of $130 and payments on your accounts payable to $210. Your accounts receivable period is 30 days. What is your firm's beginning cash balance on May 1^st?

Question

Quizplus · Accepted Answer

The beginning cash balance on May 1st is calculated by taking the beginning cash balance on April 1st and adjusting it for cash inflows and outflows during April. The cash inflows include sales from March (since the accounts receivable period is 30 days, March sales are collected in April), which were $460. The cash outflows include cash expenses of $130 and payments on accounts payable of $210. Therefore, the calculation is $280 (beginning balance) + $460 (March sales collected in April) - $130 (cash expenses) - $210 (payments on accounts payable) = $400.

On April 1st, Your Firm Had a Beginning Cash Balance

On April 1^st, Your Firm Had a Beginning Cash Balance