ABC Corp. has the following budgeted data for April, 2013 (in dollars): Accordin
ID: 2492868 • Letter: A
Question
ABC Corp. has the following budgeted data for April, 2013 (in dollars): According to the company's policy, customers repay 60% of their debts in the month of sales, and the rest is paid off next month. All purchases of materials are made on credit with 70% paid in month of purchase and the rest in the following month. All other expenses are paid in the month w en they are incurred. Operating expenses include $30,000 of depreciation. The company requires a minimum cash balance of $25,000. Compute the amount of cash available for ABC Corp. at the end of April or its cash deficit at that moment.Explanation / Answer
Answer:
Particulars April Cash balance beginning 30000 Add: cash collections 60% in month of sales 90000 40% in next month 40000 Total cash available 160000 Less: Payments: Payment for materials 70% in month of Purchase 56000 30% in following month 18000 operating expenses 60000 Payroll 70000 Income taxes 15000 Total cash payment 219000 Cash available or deficit -59000 Borrowing 84000 Minimum cash balance 25000