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On December 31,2004 , DEF Corp had an Accounts Receivable balance of $50,000 and a Cash balance of $100,000. Credit Sales for January and February
On December 31,2004 , DEF Corp had an Accounts Receivable balance of $50,000 and a Cash balance of $100,000. Credit Sales for January and February were $90,000 and $150,000 respectively. All of DEF???s sales are credit sales which are collected evenly over a two month period. Experience has shown that 2% of all credit sales are uncollectible. DEF had an Accounts Payable balance of $20,000 on December 31,2004 . DEF is a merchandising concern, which sells a single product which it purchases for $2 per unit. The product sells for $10 per unit. DEF???s policy is to have sufficient inventory on hand at the start of any month to cover 150% of that month???s sales. DEF typically pays for its purchases as follows: 80% in the month of purchase. 20% in the month following the purchase. DEF deals with a single supplier, who does not provide the company with any discount for early payment of any outstanding invoices. March sales were forecast to be 30,000 units. What would be DEF???s cash balanci at the end of January? March sales were forecast to be 30,000 units. What would be DEF???s cash balance at the end of January? $169,550 $189,550 $149,550 $180,000
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