J Incorporated is preparing their cash budget and the following data were made available: -   Sales for the month of January, February and March and April are 300,000; 320,000; 420,000 and 480,000 respectively. -   20% of sales are cash sales. 40% of sales on account are collected in the month of sale and the balance in the following month. -   Budgeted purchases for the month is 70% of next month’s sales. 60% of monthly purchases are paid in the month of purchase and the rest are paid in the following month. -   Other monthly expenses amount to 35,000, including depreciation of 5,000 At the beginning of January, cash has a balance of 20,000, accounts receivable has a balance of 45,000 while accounts payable has a balance of 40,000. The accounts receivable and accounts payable balance pertains to the sales and purchases the previous month. What is the cash balance at the end of February?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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J Incorporated is preparing their cash budget and the following data were made available:

-   Sales for the month of January, February and March and April are 300,000; 320,000; 420,000 and 480,000 respectively.

-   20% of sales are cash sales. 40% of sales on account are collected in the month of sale and the balance in the following month.

-   Budgeted purchases for the month is 70% of next month’s sales. 60% of monthly purchases are paid in the month of purchase and the rest are paid in the following month.

-   Other monthly expenses amount to 35,000, including depreciation of 5,000

At the beginning of January, cash has a balance of 20,000, accounts receivable has a balance of 45,000 while accounts payable has a balance of 40,000. The accounts receivable and accounts payable balance pertains to the sales and purchases the previous month.

What is the cash balance at the end of February?


 

a.

62,000

b.

82,000

c.

Answer not among the choices

d.

87,000

e.

72,000

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