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    Cash Budgets

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    Acme Corporation, a wholesaler, provided the following information:

    Month Merchandise Purchases Sales
    January $142,000 $172,000
    February 148,000 166,000
    March 136,000 160,000
    April 154,000 178,000
    May 160,000 166,000

    Customers pay 70% of their balances in the month of sale, 20% in the month following sale, and 10% in the second month following sale. The company pays all invoices in the month following purchase and takes advantage of a 2% discount on all amounts due. Cash payments for operating expenses in May will be $114,400; Quaker's cash balance on May 1 was $122,000.

    Determine the following:
    A. Expected cash collections during May.
    B. Expected cash disbursements during May.
    C. Expected cash balance on May 31.

    I cannot see how to work backwards on this problem because the cash balance given is for the final month and no begining cash balance is given.

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    Solution Summary

    The solution calculates expected cash collections, expected cash disbursements and expected cash balance