Pluto has a beginning cash balance of £430 on February 1st.The ﬁrm has projected sales of £600 in January, £800 in February and £900 in March.The cost of goods sold is equal to 70% of sales.
Goods are purchased one month prior to the month of sale.The trade payables period is 30 days
And the trade receivables period is 15 days.The ﬁrm has monthly cash expenses of £180.What is
The projected ending cash balance at the end of February? Assume that every month has 30 days.

Question

Quizplus · Accepted Answer

The ending cash balance is calculated by considering the beginning cash, cash inflows from sales, and cash outflows for purchases and expenses. Sales in February are £800, with 70% cost of goods sold (£560) purchased in January. Cash from January sales (£600) is received in February. Cash expenses are £180. Ending cash balance = £430 (beginning) + £600 (receipts) - £560 (purchases) - £180 (expenses) = £390.

Pluto Has a Beginning Cash Balance of £430 on February