Question

On January 1, Easton Company had cash on hand of $115,000. All of January's $220,000 sales were on account. December sales of $246,000 were also all on account. Experience has shown that Easton typically collects 40% 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 $177,000 for December and $157,000 for January. All other expenses including wages are paid in the month incurred. These amounted to $42,000 in December and $52,000 in January. Use this information to determine the projected ending balance of cash on hand for January. (Round answer to the nearest whole dollar)

Answer 1

Cash Budget
January
Beginning cash balance	115,000
Cash receipts :
Cash collection from December sales (246,000 x 60%)	147,600
Cash collection from January sales (220,000 x 40%)	88,000
Total available cash (1)	$350,600
Less: Cash payments:
Wages	42,000
Cash payments for December (177,000 x 1/2)	88,500
Cash payments for January (157,000 x 1/2)	78,500
Total cash payments (2)	$209,000
Ending cash balance (1-2)	$141,600