On May 1,Vaya Corp.had a beginning cash balance of $175.Vaya's sales for April were $430 and May sales were $480.During May,the firm had cash expenses of $110 and made payments on accounts payable of $290.Vaya's accounts receivable period is 30 days.What is the firm's beginning cash balance on June 1?

Question

Quizplus · Accepted Answer

To find the beginning cash balance on June 1, we need to subtract the cash expenses and payments on accounts payable from the sales for May and add the beginning cash balance:

Beginning cash balance + May sales - May expenses - payments on accounts payable = Ending cash balance.

$175 + $480 - $110 - $290 = $255

However, we also need to take into account the accounts receivable period of 30 days. This means that some of the May sales may not have been collected until June, so we need to subtract the amount of May sales that are still outstanding on June 1:

Outstanding accounts receivable on June 1 = May sales x accounts receivable period = $480 x (30/365) = $39.45

Ending cash balance - outstanding accounts receivable = Beginning cash balance on June 1

$255 - $39.45 = $215

Therefore, the beginning cash balance on June 1 is $215, which is answer choice C.