I can't get the correct end of the month cash balance
• Sales are budgeted at :
Nov $380,000
Dec $390,000
Jan $400,400
• The following cash collection schedule is used :
The month of sale - 70%
Next month - 27%
Uncollectible - 3%
• Cost of good sold:
65% of sale
• Desired ending inventory equals to:
80% of the following month's cost of goods sold
*Payment for merchandise is made in the month following the purchase
• Monthly depreciation - $20,000.
• Monthly expenses to be paid in cash - $22,000
• Declare a dividend payable on December 15 - $12,000
• Ignore taxes.
Balance sheet of October 31
• Assets
Cash - 15,000
Account Receivable (net of allowance) - 77,000
Inventory - 197,600
Property, plant and equipment (net) - 992,000
Total Assets - 1,281,600
• Liabilities and Stockholder's Equity
Account Payable- 240,000
Common Stock - 780,000
Retained Earnings - 259,600
Total Liabilities and Stockholder's Equity - 1,279,600
THE QUESTION IS :
The cash balance at the end of December would be :
THE ANSWER KEY IS :
$197,400
And I can't figure out how to get that number. What I got is :
Nov.31 Cash Balance = (15,000 + 77,000 + 266,000 - 240,000 - 22,000) = 96,000
Dec.31 Cash Balance = (96,000 + 102,600 + 273,000 - 258,700 - 22,000) = 190,900
What did I do wrong ? Please help me I really want to know how to get the correct answer ! Thanks
