Question
Castle Black is a merchandiser of ice picks and other ice wall climbing gear. The company plans to begin operations on January 1. The company
Castle Black is a merchandiser of ice picks and other ice wall climbing gear. The company plans to begin operations on January 1. The company expects sales in the first month of operations to total $100,000, all of which are cash sales. Purchases of inventory during the first month of operations are expected to total 35% of sales. Suppliers are hesitant to extend credit to Castle Black, as it is a new business with no track record.; as such, purchases are paid for in the month of purchase. No purchase discounts are available. Castle Black expects monthly operating expenses of $5,000. Included in this amount is Bad Debt expense, which is 2% of sales revenue and is expensed in the month of sale. No timing differences between when cash operating expenses are incurred and when they are paid exist. Castle Black expects to begin a construction project to expand its current facilities. The project will cost $6,000 in January and $7,000 in February.
Castle Black is required to maintain a minimum cash balance of $50,000 at the end of each month in case of emergencies. What is Castle Blacks ending cash balance as of January 31?
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