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Binghamton Film Corporation: Expected Cash Collections

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The following information is from Binghamton Film Corporation's financial records.

Month Sales Purchases
April $ 72,000 $ 42,000
May 66,000 48,000
June 60,000 36,000
July 78,000 54,000

Collections from customers are normally 70 percent in the month of sale, 20 percent in the month following the sale, and 9 percent in the second month following the sale. The balance is expected to be uncollectible. All purchases are on account. Management takes full advantage of the 2 percent discount allowed on purchases paid for by the tenth of the following month. Purchases for August are budgeted at $60,000, and sales for August are forecasted at $66,000. Cash disbursements for expenses are expected to be $14,400 for the month of August. The company's cash balance on August 1 was $22,000.

1. Prepare the expected cash collections schedule during August.


Month Sales Percent Expected collections
June $ ? ? % $ ?
July ? ? % ?
August ? ? % ?


Total $ $ ????

2. Prepare the expected cash disbursements schedule during August.


July purchases to be paid in August $ ------------------------------------- ??

(Click to select)Add : 2% cash discountLess : 2% cash discount

Net $ ----------------------------------------------------------------------- ???

Cash disbursements for expenses ------------------------------------ ???

Total $ -------------------------------------------------------------------- $ ???

3. Calculate the expected cash balance on August 31.

Expected cash balance $ ???

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Solution Summary

This solution prepares the expected cash collections schedule, the expected cash disbursements schedule, and calculates the expected cash balance.

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