Question

On January 1, Easton Company had cash on hand of $85,000. All of January's $204,000 sales were on account. December sales of $210,000 were also all on account. Experience has shown that Easton typically collects 35% 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 $159,000 for December and $172,000 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)

Answer 1

Answer- The projected ending balance of cash on hand for January = $51400.

Explanation-

EASTON COMPANY
CASH BUDGET
PARTICULARS		JANUARY
		$
Beginning cash balance (A)		85000
Add-Cash receipts from customers		207900
December month credit sales	$210000*65%=$136500
January month credit sales	$204000*35%=$71400
Total cash available for use (B)		292900
Less- Cash Payments
Cash paid for materials & supplies		165500
December month	$159000*50%= $79500
January month	$172000*50% =$86000
Other expenes including wages		76000
Total cash payments (C)		241500
Ending cash balance (D =B-C)		51400