Giant Koala Stores Inc has forecasted sales for July through October i

Giant Koala Stores Inc has forecasted sales for July through October in the top row of the table. Forecasted collections from cash and credit sales as well as forecasted payments to suppliers are also shown in the table.

Wages, general & administrative expenses are 28% of the current month’s sales. Giant Koala starts August with a cash balance of $7.61M. What is the cash balance at the end of September?

Sales Forecast and Cash Budget
Giant Koala Stores Inc ($000,000)
July August September October
Sales Forecast $27.000 $27.000 $33.000 $32.500
Cash Sales 15.300 22.950 28.050 27.625
Collections from last Month 4.050 4.050 4.950
Total Cash Inflows 27.000 32.100 32.575
Total Payments to Suppliers 17.940 21.418
Wages, General & Admin Expenses 7.560 7.560 9.240
Total Disbursements 25.500 30.658
Net Cash Flows
Beginning cash balance $7.610
Plus: Net Cash Flows
Ending cash Balance

A) $7.61 million
B) $8.61 million
C) $9.11 million
D) $10.55 million
E) $11.62 million

ANSWER

D