Question - The Sherman Company has a cash balance on January 1 of $123,219. Given the following data, compute Sherman's budgeted cash balance on March 31. Round all amounts to the nearest dollar.
Past and budgeted future activity, in $000:
Sales Operating expense
November 1,625 525
December 1,790 460
January 1,428 448
February 1,295 395
March 1,306 421
April 1,422 404
Sherman has a gross profit of 40%, and has a policy of maintaining an inventory of 150% of expected next-month sales. Operating expenses are paid 75% in the current month, and 25% in the following month. Purchases of merchandise are paid for 50% in the current month, and 50% in the following month. All sales are on credit. Normal pattern of collections is: 40% in month of sale, 44% in following month, 11% in next following month, 5% uncollectible.