Question

# On January 1, Easton Company had cash on hand of \$85,000. All of January's \$204,000 sales...

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- 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

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