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 March April May Credit Sales $300,000 (actual) 400,000 (actual) 473,000 (estimated) 671,000 (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 50% 30 15 5 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. Compute Spicer's budgeted cash balance at the ends of March, April, and May. Answer is complete but not entirely correct. Cash balance on March 31 $ 456,500 Cash balance on April 30 $ 533,900 Cash balance on May 31 $ 735,200

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.
January
February
March
Month
Credit Sales
$300,000 (actual)
400,000 (actual)
473,000 (estimated)
April
May
671,000 (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
50%
30
15
5
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.
Compute Spicer's budgeted cash balance at the ends of March, April, and May.
Answer is complete but not entirely correct.
Cash balance on March
31
$
456,500 X
Cash balance on April 30
$
533,900X
Cash balance on May 31
$
735,200 ×
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. January February March Month Credit Sales $300,000 (actual) 400,000 (actual) 473,000 (estimated) April May 671,000 (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 50% 30 15 5 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. Compute Spicer's budgeted cash balance at the ends of March, April, and May. Answer is complete but not entirely correct. Cash balance on March 31 $ 456,500 X Cash balance on April 30 $ 533,900X Cash balance on May 31 $ 735,200 ×
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