(2 points) It is March 1, 2021. A firm expects sales over the next 4 months to be as follows:

Month Sales Amount

March $130,000

April $80,000

May $90,000

June $95,000

Sales in January and February were $100,000 and $120,000 respectively. Twenty five percent of these sales will be collected in the month of sale, 35% will be collected in the first month after sale, and 40% will be collected two months after sale. The firm purchases inventory of 70% of next months expected sales for cash. Wages are $45,000 per month. Depreciation is $30,000 in March, April and May. Currently, $7,000 of cash is on hand. A minimum cash balance of $10,000 is required. What is the cash surplus or deficit for the month of April?

A) Surplus of $10,500

B) Surplus of $16,000

C) Surplus of $7,000

D) Deficit of $4,580

E) Deficit of $2,280