Acc400 Accounting for Decision Making: E23.9 On March 1 of the current year, Spicer Corporation

Acc400 Accounting for Decision Making
Week 4 Assignment

E23.9 Budgeting an Ending Cash Balance
On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the company’s sales are made on account. The following information has been provided by Spicer’s management:
Month Credit Sales
Jan 300,000 (actual)
Feb 400,000 (actual)
Mar 600,000 (actual)
Apr 700,000 (estimated)
May 800,000 (estimated)
The company’s collection activity on credit sales historically has been as follows:
Collections in the month of the sale 50%
Collections one month after the sale 30%
Collections two months after the sale 15%
Uncollectible accounts 5%

Spicer’s total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter.
Compute Spicer’s budgeted cash balance at the ends of March, April, and May.
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