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    Schedule expected cash collections, disbursements and cash balance

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

    Month Sales Purchase
    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 sales, 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 $60,0000, 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.

    Prepare the following schedule.
    1. Expected cash collections during August.
    2. Expected cash disbursements during August.
    3. Expected cash balance on August 31.

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    Solution Preview

    1) The expected cash collection during August is
    June Sales $60,000 * 9% + July Sales $78,000 * 20% + August Forecasted Sales $66,000 * 70% = $67,200
    For a detailed calculated for cash collection for all the months, please see the attached Excel sheet.

    2) The ...

    Solution Summary

    The solution discusses schedule expected cash collection, disbursements and cash balance.