June Corporation has the following sales forecasts for the first three months of the current year: $\begin{array}{lr}
\text { Month } & \text { Sales } \
\hline \text { January } & \$ 36,000 \
\text { February } & 24,000 \
\text { March } & 40,000
\end{array}$ 75% of sales are collected in the month of the sale and the remainder is collected in the following month.
$\begin{array}{lr}
\text { Accounts receivable balance (January 1) } & \$ 22,800 \
\text { Cash balance (January 1) } & 22,000 \
\text { Minimum cash balance needed } & 20,000
\end{array}$ 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?

Question

Quizplus · Accepted Answer

In January, 75% of sales ($36,000) are collected, which is $27,000. Adding the initial cash balance of $22,000 gives $49,000. After paying out $48,000, the ending cash balance is $49,000 - $48,000 = $1,000 + $22,800 (accounts receivable from December collected in January) = $23,800.

June Corporation Has the Following Sales Forecasts for the First