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    Expected cash balance

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    MacKenzie Ltd. expects the following transactions and events to take place in the upcoming

    Year 3:
    Sales projected for Year 3 $2,400,000 (10% of all sales are cash sales, 60% of the remaining sales are collected in the following year and the remainder in the 3rd year)

    Total Sales Year 2 $1,500,000
    Total Sales Year 1 $2,000,000
    The following are all projections for Year 3
    Proceeds from bond issue $1,000,000
    Cost of goods sold $1,200,000
    Disbursements for inventory purchases and operating costs $1,500,000
    Payment of income taxes $200,000
    Depreciation of assets $200,000
    Bad debt expense $50,000
    Gain on sale of fixed asset NBV at time of sale was $150,000 $50,000

    Based on this information what is the expected cash balance at the end of Year 3 assuming an opening balance of $400,000?

    a. $320,000
    b. $470,000
    c. $1,520,000
    d. $1,670,000
    e. $1,840,000

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    https://brainmass.com/business/cash-budgeting/expected-cash-balance-323969

    Solution Preview

    Opening cash balance = 400,000
    Add: collections
    10% of year 3 sales = 2,400,000X10% = 240,000
    60% of remaining year 2 sales = 1,500,000X.9 X 60% = 810,000 (10% is cash and so 90% is remaining)
    40% of ...

    Solution Summary

    The solution explains the calculation of expected cash balance at the end of year 3.

    $2.19

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