Question

# 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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