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Please help with the following

Fardale Corporation provided the following budgeted sales


Month                                Sales

January                          $195,000

February                        $210,000

March                            $183,000

April                              $111,000

May                               $252,000

The markup on the cost of products is 50% (meaning that sales are 150% of cost). Fardale desires to have ending inventory of 40% of the following months sales each month. 

All sales are on account. Customers pay 40% of their balances in the month of sale, 50% in the month following sale, and 10% in the second month following sale. The company pays all invoices in the month following purchase and takes advantage of a 4% discount on all amounts due. Cash payments for operating expenses in May will be $70,000; Fardale's cash balance on May 1 was $215,000.


Determine the following:

Expected cash collections during May.

Expected cash disbursements during May.

Expected cash balance on May 31.

Expected accounts receivable balance on May 31.

Top Answer

1) Expected Cash Collection during May March 183,000 x 10% = 18,300 April 111,000 x 50% = 55,500 May 252,000 x 40% = 100,800... View the full answer

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