Mega Ltd. has the following budgeted sales and purchases for the first two month

Question

Mega Ltd. has the following budgeted sales and purchases for the first two months of 20x4 Budgeted Purchases $280174 77919 Budgeted Sales January February $394869 127791 Mega's historical cash collection and disbursement patterns are as follows Sales: 45% collected in the month of sale: 55% collected in the month following the sale Purchases: 72% paid for in the month purchased: 28% paid for in the following month The company's February 1, 20x4 cash balance was $45717. Calculate the expected ending cash balance for February 20x4 Select one O a. $185851 O b. $32303 O c. $140134 O d. $47121

Explanation / Answer

Cash collection in february = (394869*55%+127791*45%) = 274683.90

Cash disbursement in feb = (280174*28%+77919*72%) = 134550.80

Calculate ending balance of cash = 45717+274683.90-134550.80 = 185851

So answer is a) $185851

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