Piano Man, Inc., has a 32-day average collection period and wants to maintain a
ID: 2623798 • 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).)
Q1 Q2 Q3 Q4 Sales $ 315 $ 390 $ 475 $ 435 Total cash disbursement 265 340 605 375Explanation / Answer
PIANO MAN, INC. Cash Budget (in millions) Q1 Q2 Q3 Q4 Beginning receivables 182 105 130 158 Sales 315 390 475 435 Cash collections 392 365 447 448 Ending receivables 105 130 158 145 Total cash collections 392 365 447 448 Total cash disbursements 265 340 605 375 Net cash inflow 127 25 -158 73 Beginning cash balance 20 147 172 14 Net cash inflow Ending cash balance 147 172 14 87 Minimum cash balance 20 20 20 20 Cumulative surplus (deficit) 127 152 -6 67