Fielding Wilderness Outfitters had projected its sales for the first six months of 2010 to be as
follows:
Jan. $250,000 April $300,000
Feb. $340,000 May $350,000
Mar. $280,000 June $380,000
Cost of goods sold is 60% of sales. Purchases are made and paid for two months prior to the sale.
40% of sales are collected in the month of the sale, 40% are collected in the month following the
sale, and the remaining 20% in the second month following the sale. Total other cash expenses are
$40,000/month. The company's cash balance as of March 1st, 2010 is projected to be $40,000, and the
company wants to maintain a minimum cash balance of $15,000. Excess cash will be used to retire
short-term borrowing (if any exists). Fielding has no short-term borrowing as of March 1st, 2010.
Assume that the interest rate on short-term borrowing is 1% per month. What is Fielding's
projected total receipts (collections) for April?
A) $124,000 B) $36,000 C) -$4,000 D) $180,000
A
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