Pecan Company had March sales and purchases of $63,000 and $47,000 respectively.The company expects April sales to increase 12% above March sales and purchases to stay consistent with March amounts.Twenty percent of the company's sales are for cash.Credit sales are collected 20% in the month of the sale and 80% in the following month.All purchases are paid for in the month following the purchase.The beginning cash balance on April 1 is $42,000.What is Pecan Company's expected cash balance on April 30?

Question

Quizplus · Accepted Answer

April sales = $63,000 x 1.12 + $70,560
April cash receipts = ($70,560 x .20) + ($70,560 x .80 x .20) + ($63,000 x .80 x .80)
$14,112 + $11,289.60 + $40,320 = $65,721.60
April 30 cash balance = $42,000 (beg.) + $65,721.60 (receipts) - $47,000 (disbursements) = $60,721.60

Pecan Company Had March Sales and Purchases of $63,000 and $47,000