Kneeling Corporation has the following sales forecasts for the first three months of the current year: In the month of the sale 65% of sales are collected,and the remainder is collected in the following month.
$$\begin{array} { l r }
\text { Month } & \text { Sales } \
\text { January } & \$ 36,000 \
\text { February } & 24,000 \
\text { March } & 40,000
\end{array}$$ What is the cash balance at the end of January,assuming that cash is received only from customers and that $48,000 is paid out during January?
$$\begin{array} { l r }
\text { Accounts receivable balance (January 1) } & \$ 22,800 \
\text { Cash balance (January 1) } & 30,000 \
\text { Minimum cash balance needed } & 20,000
\end{array}$$

Question

Kneeling Corporation has the following sales forecasts for the first three months of the current year: In the month of the sale 65% of sales are collected,and the remainder is collected in the following month.
$$\begin{array} { l r } 
\text { Month } & \text { Sales } \
\text { January } & \$ 36,000 \
\text { February } & 24,000 \
\text { March } & 40,000
\end{array}$$ What is the cash balance at the end of January,assuming that cash is received only from customers and that $48,000 is paid out during January?
$$\begin{array} { l r } 
\text { Accounts receivable balance (January 1) } & \$ 22,800 \
\text { Cash balance (January 1) } & 30,000 \
\text { Minimum cash balance needed } & 20,000
\end{array}$$

Quizplus · Accepted Answer

In January, 65% of sales ($36,000) are collected, which equals $23,400. Adding the initial cash balance of $30,000 and subtracting the $48,000 paid out gives a final cash balance of $28,200 at the end of January.

Kneeling Corporation Has the Following Sales Forecasts for the First