Magenta Corporation has the following sales forecasts for the selected three-month period for the current year: Month Sales July $30,000 August 15,000 September 12,000 All sales are on account. Sixty percent of sales are collected in the month of the sale, and the remainder are collected in the following month. Accounts receivable balance (July 1) $28,000 Cash balance (July 1) 17,000 Minimum cash balance is $13,000. Cash can be borrowed in $2,000 increments from the local bank (assume no interest charges). What is the cash balance at the end of July, assuming that cash is received only from customers and that $53,000 is paid out during July? a.$18,500 b.$14,000 c.$25,000 d.$20,200
Magenta Corporation has the following sales forecasts for the selected three-month period for the current year: Month Sales July $30,000 August 15,000 September 12,000 All sales are on account. Sixty percent of sales are collected in the month of the sale, and the remainder are collected in the following month. Accounts receivable balance (July 1) $28,000 Cash balance (July 1) 17,000 Minimum cash balance is $13,000. Cash can be borrowed in $2,000 increments from the local bank (assume no interest charges). What is the cash balance at the end of July, assuming that cash is received only from customers and that $53,000 is paid out during July? a.$18,500 b.$14,000 c.$25,000 d.$20,200
Chapter7: Budgeting
Section: Chapter Questions
Problem 14EA: Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is...
Related questions
Question
Magenta Corporation has the following sales forecasts for the selected three-month period for the current year:
All sales are on account. Sixty percent of sales are collected in the month of the sale, and the remainder are collected in the following month.
Minimum cash balance is $13,000. Cash can be borrowed in $2,000 increments from the local bank (assume no interest charges).
What is the cash balance at the end of July, assuming that cash is received only from customers and that $53,000 is paid out during July?
Month | Sales |
July | $30,000 |
August | 15,000 |
September | 12,000 |
All sales are on account. Sixty percent of sales are collected in the month of the sale, and the remainder are collected in the following month.
$28,000 | |
Cash balance (July 1) | 17,000 |
Minimum cash balance is $13,000. Cash can be borrowed in $2,000 increments from the local bank (assume no interest charges).
What is the cash balance at the end of July, assuming that cash is received only from customers and that $53,000 is paid out during July?
a.$18,500
b.$14,000
c.$25,000
d.$20,200
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning