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Compute the expected cash collections during May

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Question - Monty Corporation, a merchandising company, has provided the following budget data:

Purchases January $42,000

February 48,000

March 36,000

April 54,000

May 60,000

Sales $72,000 66,000 60,000 78,000 66,000

Collections from customers are normally 70% in the month of sale, 20% in the month following the sale, and 9% in the second month following the sale. The balance is expected to be uncollectible. Monty pays for purchases in the month following the purchase. Cash disbursements for expenses other than merchandise purchases are expected to be $14,400 for May. Monty's cash balance at May 1 was $22,000.

Required -

a. Compute the expected cash collections during May.

b. Compute the expected cash balance at May 31.

Reference no: EM132595748

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