Wyler, Inc. has a beginning cash balance of $380 on March 1. The ﬁrm has projected sales of $550 in February, $700 in March, and $800 in April. The cost of goods sold is equal to 75% of sales.
Goods are purchased one month prior to the month of sale. The accounts payable period is 30
Days and the accounts receivable period is 15 days. The ﬁrm has monthly cash expenses of $200.
What is the projected ending cash balance at the end of March? Assume that every month has 30
Days.

Question

Quizplus · Accepted Answer

The cash inflow for March is from February sales collected in March, which is 50% of $550 = $275. The cash outflow includes the cost of goods sold for March sales, which were purchased in February, 75% of $700 = $525, and monthly expenses of $200. The ending cash balance is $380 (beginning balance) + $275 (inflow) - $525 (COGS) - $200 (expenses) = $280.