Question

On January 1, Easton Company had cash on hand of $105,000. All of January's $232,000 sales...

On January 1, Easton Company had cash on hand of $105,000. All of January's $232,000 sales were on account. December sales of $214,000 were also all on account. Experience has shown that Easton typically collects 45% of receivables in the month of the sale and the balance the following month. All materials and supplies are purchased on account and Easton has a history of paying for half of these purchases in the month of purchase and half the following month. Such purchases were $153,000 for December and $151,000 for January. All other expenses including wages are paid in the month incurred. These amounted to $42,000 in December and $76,000 in January. Use this information to determine the projected ending balance of cash on hand for January. (Round answer to the nearest whole dollar)

Homework Answers

Answer #1

Calculation of Ending balance of Cash on Hand:

Particulars

Amount ($)

Opening balance of cash on Hand

$105,000

Add:

Cash received from December Sales [214000*(100%-45%)]

$117,700

Cash received from January Sales [232000*(100%-55%)]

$104,400

Less:

Cash payment for supplies of December [153000*(100%-50%)]

$76,500

Cash payment for supplies of December [151000*(100%-50%)]

$75,500

Cash payment of all other expenses including Wages

$76,000

Ending balance of Cash on Hand

$99,100

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