Piano Man, Inc., has a 32-day average collection period and wants to maintain a
ID: 2581556 • Letter: P
Question
Piano Man, Inc., has a 32-day average collection period and wants to maintain a minimum cash balance of $20 million, which is what the company currently has on hand. The company currently has a receivables balance of $182 million and has developed the following sales and cash disbursement budgets in millions:
Complete the following cash budget for the company. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answers in millions of dollars. Round your answers to the nearest whole million dollar amount (e.g., 32).)
Piano Man, Inc., has a 32-day average collection period and wants to maintain a minimum cash balance of $20 million, which is what the company currently has on hand. The company currently has a receivables balance of $182 million and has developed the following sales and cash disbursement budgets in millions:
Explanation / Answer
PIANO MAN, INC. Cash Budget (in millions) Q1 Q2 Q3 Q4 Beginning receivables $182.00 $105.00 $130.00 $158.00 Sales $315.00 $390.00 $475.00 $435.00 Cash collections Ending receivables $105.00 $130.00 $158.00 $145.00 Total cash collections $392.00 $365.00 $447.00 $448.00 Total cash disbursements $265.00 $340.00 $605.00 $375.00 Net cash inflow $127.00 $25.00 -$158.00 $73.00 Beginning cash balance $20.00 $147.00 $172.00 $14.00 Net cash inflow $127.00 $25.00 -$158.00 $73.00 Ending cash balance $147.00 $172.00 $14.00 $87.00 Minimum cash balance $20.00 $20.00 $20.00 $20.00 Cumulative surplus (deficit) $127.00 $152.00 -$6.00 $67.00