Question

Reliable company specializes in homemade biscuits and receives all income from sales. The sales estimates (in million$) for the four quarters for the company are as follows: 01 = 600, Q2 = 500, Q3 = 550, Q4 = 640. The average collection period for accounts receivables is 45 days. Beginning receivables (Q1 beginning) is $300 million. The purchases are 50, of next quarter sales. Beginning payables (Q1 beginning) is $100 million. The accounts payable period is 45 days. The beginning cash balance (Q1 beginning) is $50 million so how much will be the cash balance at the end of Quarter 2

Answer 1

Since the number of days in each quarter is not known (as the year start and end details are not given, whether Calendar year or any other fiscal year) we have taken days in quarter as 90. If the number of days in a quarter are known, we would have used that to find the closing accounts receivable of quarter.

Amounts are in $ and in millions

Closing Cash balance at end of 2nd quarter is $712.50 million

Note :

For purchases it was mentioned as "Purchases are 50, of next quarter sales". It is taken as purchases are 50% of next quarter sales assuming there is printing mistake.

Also if you have taken actual number of days in quarter instead of 90 days, the answer would have been different. As there is no information regarding that it is ignored