A company expects its September sales to be 15% higher than its August sales of

Question

A company expects its September sales to be 15% higher than its August sales of $140,000. Purchases were $75,000 in August and are expected to be $85,000 in September. All sales are on credit and are collected as follows: 30% in the month of the sale and 70% in the following month. Merchandise purchases are paid as follows: 25% in the month of purchase and 75% in the following month. The beginning cash balance on September 1 is $71,500. The ending cash balance on September 30 would be:

$121,800
$148,700
$140,300
$143,700
$135,300

Explanation / Answer

cash collected in September = 30% *September sales + 70% *August sales =30% *$140,000*115% + 70%*$140,000 =$146300 Cash payment in september =25%*September Purchases + 75%*August Purchase =25%*$85,000 +75%*$75,000 =$77,500 ending cash balance = beginning cash balance +cash collected -Cash payment =$71,500 +$146300-$77,500 = $140,300 Answer $140,300

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