Question
Problem #7 (25 points) The following information pertains to Martinez Company: Month Sales Purchases January$72,000$48,000 February$102,000$55,000 March$138,000$74,000 Cash is collected from customers in the following
Problem #7 (25 points)
The following information pertains to Martinez Company:
MonthSalesPurchases
January$72,000$48,000
February$102,000$55,000
March$138,000$74,000
Cash is collected from customers in the following manner:
Month of sale44%
Month following the sale56%
60% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
Labor costs are 30% of sales. Other operating costs are $52,000 per month (including $15,000 of depreciation). Both of these are paid in the month incurred.
The cash balance on March 1 is $19,000. A minimum cash balance of $12,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.
Required:
How much cash will be disbursed in total in March?
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