Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following information pertains to Hepburn Company. Month Sales Purchases January $48000 $26400 February $43200 $25900 March $43200 $23800 Cash is collected from customers 40percent
The following information pertains to Hepburn Company.
Month | Sales | Purchases |
January | $48000 | $26400 |
February | $43200 | $25900 |
March | $43200 | $23800 |
- Cash is collected from customers 40percent in the month of the sale and 60in the month immediately following the sale.
- 55percent of purchases are paid for in cash in the month of the purchase, and the balance is paid the following month.
- Labor costs are 24percent of sales. Other operating costs are $23000per month, including $5500of depreciation. These costs are paid in the month incurred.
- The cash balance on March 1st is $8000.
- A minimum cash balance of $8000 is required at the end of the month.
- Money can be borrowed in multiples of $1000.
1. What is the expected cash balance at the end of March assuming that the Hepburn Company borrows if needed to meet its desired minimum cash balance?
2. What is the expected cash balance at March 31st if Hepburn Company doesn't do any borrowing?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started