The sales manager of EKP Inc. has estimated sales for January, February, March, and April to be $70,000, $75,000, $83,000, and $90,000 respectively. Further, the manager expects that 10% of the sales will be for cash, and the collection of the credit sales will be made as follows:

Month of sale 60%

Month following the sale 20%

Second month following the sale 15%

The remaining credit sales are uncollectable.

Instructions

a) Determine the cash collections for March. (4 marks)

b) If EKP Inc.s cash balance is $9,685 on March 1, cash expenditures are projected to equal $83,450 for March, and management wants a minimum cash balance of $7,000, how much does EKP Inc. need to borrow in March? (4 marks)