Question

Mandalay Enterprises has a budgeted beginning cash balance of $55,000. They anticipate collecting $52,916 of their accounts receivable, doing $5,000 in cash sales, and paying accounts payable invoices totaling $45,000. They plan to incur another $21,000 in payables, and invoice $22,500 to their customers. What is their budgeted ending cash balance?

Answer 1

Mandalay Enterprises' budgeted ending cash balance is calculated as the beginning balance plus cash inflows from receivables and sales, minus cash outflows for payables. The calculated budgeted ending cash balance is $46,916.

Step-by-step explanation:

To calculate Mandalay Enterprises' budgeted ending cash balance, we need to consider the budgeted beginning cash balance, the cash inflows from collections on accounts receivable and cash sales, and the cash outflows from paying accounts payable and the additional payables incurred.

The budgeted beginning cash balance is $55,000. The anticipated collections on accounts receivable are $52,916, and cash sales amount to $5,000. The payments for accounts payable total $45,000 and the additional payables incurred are $21,000. The invoices issued to customers totaling $22,500 are not considered in the cash balance as they are not cash inflow and may be collected later.

Therefore, the calculation for the budgeted ending cash balance is:

• Beginning Cash Balance: $55,000
• Add: Collections on Accounts Receivable: $52,916
• Add: Cash Sales: $5,000
• Subtract: Payments for Accounts Payable: $45,000
• Subtract: Additional Payables: $21,000

The budgeted ending cash balance will be:
$55,000 + $52,916 + $5,000 - $45,000 - $21,000 = $46,916.