CraftCo, Inc.'s projected sales for the first six months of 2012 are given below:
Jan. $500,000 April $490,000
Feb. $740,000 May $740,000
Mar. $380,000 June $610,000
40% of sales are collected in cash at time of sale, 50% are collected in the month following the sale,
and the remaining 10% are collected in the second month following the sale. Cost of goods sold is
60% of sales. Purchases are made in the month prior to the sales, and payments for purchases are
made in the month of the sale. Total other cash expenses are $40,000/month. The company's cash
balance as of February 28, 2012 will be $25,000. Excess cash will be used to retire short-term
borrowing (if any). CraftCo, Inc. has no short term borrowing as of February 28, 2012. Assume that
the interest rate on short-term borrowing is 1% per month. The company must have a minimum
cash balance of $15,000 at the beginning of each month. What is CraftCo, Inc.'s projected cash
balance at the end of March 2012?
A) $352,000 B) $301,000 C) $329,000 D) $361,000
C
You might also like to view...
Which of the following is an advantage of localized advertising campaigns compared to standardized marketing?
A) cost savings B) increased control over campaigns C) focus on product attributes relevant for a nation D) potential creative leverage of a global appeal
Even though the logic behind each form of acquisition varies, the criteria for judging their
success are the same. Indicate whether the statement is true or false