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The following information pertains to Dresden Company: Month Sales Purchases January $100,000 $26,000 February $80,000 $30,000 March $50,000 $48,000 The company's sales are 40%
The following information pertains to Dresden Company: Month Sales Purchases January $100,000 $26,000 February $80,000 $30,000 March $50,000 $48,000 The company's sales are 40% cash and 60% on credit. Credit sales are collected as follows: -30% collected in month of sale; 60% in the month after the sale -10% two months after the sale All purchases other than labour and operating costs are paid in cash in the month incurred.. Labour costs are 50% of sales. Other operating costs are $15,000 per month (including $4,000 of depreciation). Both of these, labour and operating costs, are paid in the month incurred. There are no other cash payments. The cash balance on March 1 is $6,000. A minimum cash balance of $10,000 is required at the end of the month. Money can be borrowed in multiples of $100. Required: 1. What is the total cash collection in March? 2. What is the total cash payment in March? 3. How much will Dresden need to borrow in March?
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