On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the company's sales are made on account. The following information has been provided by Spicer's management: Month January February Credit Sales $ 300,000 (actual) 400,000 (actual) 569,000 (estimated) 718,000 (estimated) 800,000 (estimated) The company's collection activity on credit sales historically has been as follows: Collections in the month of the sale Collections one month after the sale Collections two months after the sale Uncollectible accounts March April May Spicer's total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter. Required: Compute Spicer's budgeted cash balance at the ends of March, April, and May. Beginning Cash Collections on January Sales Collections on February Sales Collections on March Sales Collections on April Sales Collections on May Sales Total Cash Available Less: Expenditures Ending Cash Balance 50% 30 15 5 $ March 0 $ April 0 $ May 0

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the
company's sales are made on account. The following information has been provided by Spicer's management:
Month
January
February
Credit Sales
$ 300,000 (actual)
400,000 (actual)
569,000 (estimated)
718,000 (estimated)
800,000 (estimated)
The company's collection activity on credit sales historically has been as follows:
Collections in the month of the sale
Collections one month after the sale
Collections two months after the sale
Uncollectible accounts
March
April
May
Spicer's total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its
cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter.
Required:
Compute Spicer's budgeted cash balance at the ends of March, April, and May.
Beginning Cash
Collections on January Sales
Collections on February Sales
Collections on March Sales
Collections on April Sales
Collections on May Sales
Total Cash Available
Less: Expenditures
Ending Cash Balance
50%
30
15
5
$
March
0
$
April
0
$
May
Transcribed Image Text:On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the company's sales are made on account. The following information has been provided by Spicer's management: Month January February Credit Sales $ 300,000 (actual) 400,000 (actual) 569,000 (estimated) 718,000 (estimated) 800,000 (estimated) The company's collection activity on credit sales historically has been as follows: Collections in the month of the sale Collections one month after the sale Collections two months after the sale Uncollectible accounts March April May Spicer's total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter. Required: Compute Spicer's budgeted cash balance at the ends of March, April, and May. Beginning Cash Collections on January Sales Collections on February Sales Collections on March Sales Collections on April Sales Collections on May Sales Total Cash Available Less: Expenditures Ending Cash Balance 50% 30 15 5 $ March 0 $ April 0 $ May
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