Question

The beginning cash balance is $15,000. Sales are forecasted at $800,000 of which 80% will be on credit. 70% of credit sales are expected to be collected in the year of sale, 28% in the year thereafter. Cash expenditures for the year are forecasted at $475,000. Accounts Receivable from previous accounting periods totaling $9,000 and will all be collected in the current year. The company is required to make a $15,000 loan payment on the last day of every year.. Compute the excess of cash receipts over cash disbursements during the current year.

Answer 1

$127,000

Step-by-step explanation:

Cash sales=1-80%=20%*$800,000=$160,000.00

Credit sales collection=($800,000-$160,000)*70%=$448,000.00

Accounts receivable from previous year=$9,000

Total cash receipts=$160,000+$448,000+$9,000=$ 617,000.00

Total cash payments= cash expenditure+loan payment

cash expenditures is $475,000

loan payment is $15,000

total cash payments=$475,000+$15,000=$490,000

excess of cash receipts over cash disbursements=$617,000-$490,000=$127,000