Reference no: EM132501920

Fardale Corporation provided the following budgeted sales information:

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.

Required:

Question 1: Determine the following:

1. Expected cash collections during May.
2. Expected cash disbursements during May.
3. Expected cash balance on May 31.
4. Expected accounts receivable balance on May 31.