Reference no: EM131799749

Question - The Sherman Company has a cash balance on January 1 of $123,219. Given the following data, compute Sherman's budgeted cash balance on March 31.  Round all amounts to the nearest dollar.

Past and budgeted future activity, in $000:

                               Sales                      Operating expense

November                 1,625                        525

December                 1,790                        460                                                        

January                    1,428                         448

February                   1,295                        395

March                       1,306                        421

April                         1,422                        404

Sherman has a gross profit of 40%, and has a policy of maintaining an inventory of 150% of expected next-month sales.  Operating expenses are paid 75% in the current month, and 25% in the following month.  Purchases of merchandise are paid for 50% in the current month, and 50% in the following month.  All sales are on credit.  Normal pattern of collections is: 40% in month of sale, 44% in following month, 11% in next following month, 5% uncollectible.