Answered

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BusyBody Company expects its November sales to be 25% higher than its October sales of $240,000. Purchases were $100,000 in October and are expected to be $100,000 in November. All sales are on credit and are collected as follows: 35% in the month of the sale and 60% in the following month. Purchases are paid 35% in the month of purchase and 65% in the following month. The cash balance on November 30 will be:_______.
A. $149,000
B. $135,500
C. $262,500
D. $162,500

Sagot :

Zviko

Answer:

$149,000

Explanation:

Cash Budget for the month of November

Receipts   :

Cash collections from customers :

From November Sales - ($240,000 x 1.25 x 0.35)     $105,000

From October Sales - ($240,000 x 0.60)                    $144,000  

Total Receipts                                                              $249,000

Payments :

Payments to Suppliers :

November Purchases ($100,000 x 0.35)                    $35,000

October Purchases ($100,000 x 0.65)                        $65,000

Total Payments                                                            $100,000

Balance (Receipts - Payments)                                   $149,000

therefore,

The cash balance on November 30 will be $149,000.

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