The following information relates to the Hepburn Company:

                           Monthly 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 ways:

Sales month 30%

70% in the month following the sale

40% of the purchases are paid in cash within the month of purchase, and the remaining amount is paid the following month.

Labor costs are 20% of sales. Other operating costs are $30,000 per month (including $8,000 depreciation). Both of these are paid in the accrued month.

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.

What is the cash balance at the end of March?

Answer rating: 100% (QA)

To calculate the cash balance at the end of March we need to consider the cash collections cash paym... View the full answer