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    sky2412's Avatar
    sky2412 Posts: 2, Reputation: 1
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    #1

    Sep 20, 2013, 07:53 AM
    Hoyt, Inc. has estimated current year sales (in Millions) for the next four quarters.
    Q1 $240 Q2 $250 Q3 $205 Q4 $350

    Sales for 1st quarter next year are projected to be $230.

    Accounts Rec. at the beginning of the year was 100.
    Beginning Accounts payable were 60.
    The beginning cash balance is 50.
    Hoyt, Inc. cash collection schedule is as follows: 60% if sakes in current quarter, 40% in the 1st quarter sale.
    Purchasesfrom suppliers in a quarter are equal to 50% of the next quarter's forecasted sales.
    Suppliers are normally paid in 50% in the quarter purchases are made and 50% in the following quarter.
    Wages taxes and other expenses are 20% of current quarter sales
    Hoyt, Inc. maintains a minimum cash of 30.
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Sep 20, 2013, 07:55 AM
    Looks like a simple cash budget problem. What are you stuck on, or what do you need help with.
    sky2412's Avatar
    sky2412 Posts: 2, Reputation: 1
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    #3

    Sep 20, 2013, 08:03 AM
    I am confused with the Q1-240 and the Sales for the 1st quarter next year which is to be projected at 230.00
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #4

    Sep 20, 2013, 08:13 AM
    You are dealing with 5 quarters, 4 in the current year and 1 in the following year. I would assume that quarter 1 is your current quarter.

    Your cash collections schedule does not make sense. I think it is supposed to be that 60% of sales in the quarter of the sale and 40% in the quarter following the sale are collected.

    If this is correct you start with Quarter 1 sales times 60% equals your cash collections in the first quarter. For quarter 2 you start with quarter 1 sales times 40% then add your quarter 2 sales times 60%. Then you do the following quarters in the same fashion.

    It looks like you are missing previous quarter sales information for the cash collections in the current quarter.
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