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In problem 7, Big City Manufacturing (BCM) assumed that all credit sales were paid in full,...

In problem 7, Big City Manufacturing (BCM) assumed that all credit sales were paid in full, with no bad debt expense. For this problem, please assume that bad debt expense is again 0% for BCM. Purchases for next month's sales are 50% of projected sales for the next month, and April sales are estimated to be $495,000; purchases for April are paid in cash in March. "Other payments," which include wages, rent, and taxes, are 25% of sales for the current month. Construct a cash budget for March using your expected cash receipts from problem 7 and calculate the average net cash flow during the month of March. Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.

question 7 to refer to

Big City Manufacturing (BCM) is preparing its cash budget and expects to have sales of $450,000 in January, $375,000 in February, and $555,000 in March. If 20% of the sales are for cash, 45% are credit sales paid in the month after the sale, and another 35% are credit sales paid 2 months after the sale, what are the expected cash receipts for March? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.

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Answer #1

CALCULATION OF EXPECTED CASH SALES IN MARCH

PARTICULARS JANUARY FEBRUARY MARCH APRIL
SALES 450000 375000 555000 495000
20% CURRENT MONTH 90000 75000 111000
45% OF PREVIOUS MONTH DEBTORS 202500 168750
35% OF SALE OF SECOND LAST MONTH DEBTORS 157500
CASH RECEIPTS DURING MONTH 90000 277500 437250

CASH BUDGET DURING JANUARY TO MARCH

RECEIPTS JANUARY FEBRUARY MARCH
OPENING BALANCE -210000 -303750
RECEIPTS FROM SALES 90000 75000 111000
RECEIPTS FROM DEBTORS (45%+35%) 202500 326250
TOTAL OF RECEIPTS 90000 67500 133500
PAYMENTS
CASH PURCHASES (50%OF NEXT MONTH'S SALES) 187500 277500 247500
OTHER PAYMENTS (RENT WAGES AND TAXES ) 25% OF SALES 112500 93750 138750
TOTAL PAYMENTS 300000 371250 386250
CLOSING BALANCE -210000 -303750 -252750
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