How much cash will be collected from customers in March?
The following information pertains to Hepburn Company:
Month Sales Purchases
January $60,000 $32,000
February $80,000 $40,000
March $100,000 $56,000
? Cash is collected from customers in the following manner:
Month of sale 30%
Month following the sale 70%
? 40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
? Labor costs are 20% of sales. Other operating costs are $30,000 per month (including $8,000 of depreciation). Both of these are paid in the month incurred.
? The cash balance on March 1 is $8,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.
A) $94,000
B) $86,000
C) $100,000
D) $110,000
Answer: B
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