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The beginning cash balance is $10,000. Sales are forecasted at $800,000 of which 80% will be...

The beginning cash balance is $10,000. Sales are forecasted at $800,000 of which 80% will be on credit. 70% of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $475,000. Accounts Receivable from previous accounting periods totaling $9,000 will be collected in the current year. The company is required to make a $15,000 loan payment and an annual interest payment on the last day of every year. The loan balance as of the beginning of the year is $90,000, and the annual interest rate is 10%.

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Answer #1
Solution:
Computation of Closing Cash Balance
Particluars Amount ($) Amount ($)
Beginning Cash Balance      10,000.00
Add: Cash Sales
(800000*20%) 1,60,000.00
Add: Collection from credit sales
(800000*80%*70%) 4,48,000.00
Add: Collection from Accounts Receivable        9,000.00 6,17,000.00
Less: Cash Expenditure 4,75,000.00
Less: Loan payment      15,000.00
Less: Interest on Loan
(90000*10%)        9,000.00 4,99,000.00
Closing Cash Balance 1,28,000.00
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