Asked by Itzamar Gutierrez on Jul 08, 2024
Verified
On April 1st, your firm had a beginning cash balance of $280. Your sales for March were $460 and your April sales were $510. During April you had cash expenses of $130 and payments on your accounts payable to $210. Your accounts receivable period is 30 days. What is your firm's beginning cash balance on May 1st?
A) $400
B) $430
C) $450
D) $860
E) $910
Accounts Receivable Period
The average number of days it takes for a company to collect payments owed by its customers.
Cash Expenses
Expenses that require an immediate outlay of cash during a given time period.
Beginning Cash Balance
The amount of cash a company has at the start of a new financial period, carried over from the end of the previous period.
- Determine the concluding cash position for a selected period, reflecting forecasted sales, costs, and strategies for managing cash.
Verified Answer
HG
Hadassah GonzalezJul 12, 2024
Final Answer :
A
Explanation :
The beginning cash balance on May 1st is calculated by taking the beginning cash balance on April 1st and adjusting it for cash inflows and outflows during April. The cash inflows include sales from March (since the accounts receivable period is 30 days, March sales are collected in April), which were $460. The cash outflows include cash expenses of $130 and payments on accounts payable of $210. Therefore, the calculation is $280 (beginning balance) + $460 (March sales collected in April) - $130 (cash expenses) - $210 (payments on accounts payable) = $400.
Learning Objectives
- Determine the concluding cash position for a selected period, reflecting forecasted sales, costs, and strategies for managing cash.