18.2 Because Greenwell has a 60-day collection period, only sales made in the first 30 days of the quarter will be collected in the same quarter. Total cash collections in the first quarter will thus equal 30y90 5 1⁄3 of sales plus beginning receivables, or 1⁄3 3 $150 1 240 5 $290. Ending receivables for the first quarter (and the second- quarter beginning receivables) are the other 2⁄3 of sales, or 2⁄3 3 $150 5 $100. The remaining calculations are straightforward, and the completed budget follows: GREENWELL CORPORATION Cash Budget (in millions) Q1 Q2 Q3 Q4 Beginning receivables $240 $100 $110 $120 Sales 150 165 180 135 Cash collections 290 155 170 165 Ending receivables $100 $110 $120 $ 90 Total cash collections $290 $155 $170 $165 Total cash disbursements 170 160 185 190 Net cash inflow $120 2$ 5 2$ 15 2$ 25 Beginning cash balance $ 45 $165 $160 $145 Net cash inflow 120 2 5 2 15 2 25 Ending cash balance $165 $160 $145 $120 Minimum cash balance 2 160 2 160 2 160 2 160 Cumulative surplus (deficit) $ 5 $ 0 2$ 15 2$ 40 The primary conclusion from this schedule is that, beginning in the third quarter, Greenwell’s cash surplus becomes a cash deficit. By the end of the year, Greenwell will need to arrange for $40 million in cash beyond what will be available.
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