Question

On January 1, Easton Company had cash on hand of $90,000. All of January's $236,000 sales were on account. December sales of $238,000 were also all on account. Experience has shown that Easton typically collects 25% 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 $171,000 for December and $166,000 for January. All other expenses including wages are paid in the month incurred. These amounted to $42,000 in December and $64,000 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

Projected ending balance = $95,000

Cash Budget
	January
Beginning Cash Balance	$          90,000
Cash Receipts
Cash Sales	$          59,000
Accounts Receivable, December	$        178,500
Total Cash Available	$        327,500
Cash Disbursements
For Purchases	$        168,500
Other Expenses	$          64,000
Total Cash Disbursements	$        232,500
Cash balance at end of month	$          95,000