1A4X COOPER COMPANY’S MANAGEMENT TEAM IS PREPARING A CASH BUDGET FOR...

73. CSO: 1A4b LOS: 1A4x

Cooper Company’s management team is preparing a cash budget for the coming quarter.

The following budgeted information is under review.

January February March

Revenue $700,000 $800,000 $500,000

Inventory purchases 350,000 425,000 225,000

Other expenses 150,000 175,000 175,000

The company expects to collect 40% of its monthly sales in the month of sale and 60% in

the following month. 50% of inventory purchases are paid in the month of purchase, and

the other 50% in the following month. All payments for other expenses are made in the

month incurred.

Cooper forecasts the following account balances at the beginning of the quarter.

Cash $100,000

Accounts receivable 300,000

Accounts payable (Inventory) 500,000

Given the above information, the projected change in cash during the coming quarter will

be

a. $412,500.

b. $300,000.

c. $112,500.

d. $ -0-.

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