Asked by Cassandra Ramirez on Jul 07, 2024
Verified
Xolo Inc. had an August ending cash balance of $70,000. As well, it had sales of $60,000 in August, $80,000 in September, and projects sales of $95,000 for October, $115,000 for November, and $145,000 for December. The firm collects its receivables in the month after the sale. Given this information, calculate its cash balance at the end of November.
A) $300,000
B) $325,000
C) $350,000
D) $375,000
E) $400,000
Receivables
Money owed to a company by customers for goods or services that have been delivered or used but not yet paid for.
Ending Cash Balance
The amount of cash a company has available at the end of a financial period.
Sales
The total amount generated from selling goods or services over a specific period of time.
- Absorb the mechanisms of receivables accumulation within established timelines and their significance for liquidity status.
Verified Answer
CM
Chris McNattJul 08, 2024
Final Answer :
B
Explanation :
The cash balance at the end of November includes the initial $70,000, plus collections from sales in the previous months. Collections start in September from August sales ($60,000), October from September sales ($80,000), November from October sales ($95,000). So, the total cash balance by the end of November is $70,000 + $60,000 + $80,000 + $95,000 = $305,000. The closest option to this calculation is $325,000.
Learning Objectives
- Absorb the mechanisms of receivables accumulation within established timelines and their significance for liquidity status.