Thomas & Cooke Corporation has the following sales forecasts for the first three months of the current year:
85% of sales are collected in the month of the sale and the remainder is collected in the following month.

What is the cash balance at the end of January, assuming that cash is received only from customers and that $50,000 is paid out during January?

Question

Thomas & Cooke Corporation has the following sales forecasts for the first three months of the current year:   
 85% of sales are collected in the month of the sale and the remainder is collected in the following month.
 
  What is the cash balance at the end of January, assuming that cash is received only from customers and that $50,000 is paid out during January?

Quizplus · Accepted Answer

Cash balance at the end of January = [Cash balance (January 1) + Accounts receivable balance (January 1) + Collection on account (0.85 × Expected sales for the month of January) - Total cash disbursements
Cash balance at the end of January = $25,000 + $25,800 + (0.85 × $39,000) - $50,000 = $33,950

Thomas & Cooke Corporation Has the Following Sales Forecasts for the First