Jupiter stores had a Quarter 2 beginning cash balance of $647.Sales for Quarters 1 through 3 are estimated at $800,$950,and $1,200,respectively.The cost of goods sold is equal to 59 percent of sales.Goods are purchased one quarter prior to the month of sale.The accounts payable period is 30 days,and the accounts receivable period is 15 days.The firm had quarterly cash expenses of $210.What was the cash balance at the end of Quarter 2? Assume a 360-day year.

Question

Quizplus · Accepted Answer

To find the cash balance at the end of Quarter 2, calculate the cash inflows and outflows. Sales for Quarter 2 are $950, with 59% as the cost of goods sold, which is $950 * 0.59 = $560.50. Purchases for Quarter 2 are based on Quarter 3 sales, which are $1,200 * 0.59 = $708. The cash outflow for purchases in Quarter 2 is the cost of goods sold from Quarter 1, which is $800 * 0.59 = $472. Cash inflow from sales in Quarter 2 is $950. Cash expenses are $210. The cash balance at the end of Quarter 2 is $647 (beginning balance) + $950 (sales) - $472 (purchases) - $210 (expenses) = $703.17.

Jupiter Stores Had a Quarter 2 Beginning Cash Balance of $647.Sales