Avengers Inc. began operations on January 1 of the current year with a $25,000 cashbalance. 40% of sales are collected in the month of sale; 60% are collected in the monthfollowing sale. Similarly, 45% of purchases are paid in the month of purchase, and 55% are paid in the month following purchase. The following data apply to January - Sales$75000, purchases $60000 and operating expenses - $9000 and February Sales $80000, purchases $65000 and operating expenses - $ 18000. If operating expenses arepaid in the month incurred and include monthly depreciation charges of $5000, determine the change in Avenger's cash balance during January and February monthseparately and the cash balance at the end of January and February.
Avengers Inc. began operations on January 1 of the current year with a $25,000 cashbalance. 40% of sales are collected in the month of sale; 60% are collected in the monthfollowing sale. Similarly, 45% of purchases are paid in the month of purchase, and 55% are paid in the month following purchase. The following data apply to January - Sales$75000, purchases $60000 and operating expenses - $9000 and February Sales $80000, purchases $65000 and operating expenses - $ 18000. If operating expenses arepaid in the month incurred and include monthly depreciation charges of $5000, determine the change in Avenger's cash balance during January and February monthseparately and the cash balance at the end of January and February.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Avengers Inc. began operations on January 1 of the current year with a $25,000 cashbalance. 40%
of sales are collected in the month of sale; 60% are collected in the monthfollowing sale. Similarly,
45% of purchases are paid in the month of purchase, and 55% are paid in the month following
purchase. The following data apply to January - Sales$75000, purchases $60000 and operating
expenses - $9000 and February Sales $80000, purchases $65000 and operating expenses - $
18000. If operating expenses arepaid in the month incurred and include monthly depreciation
charges of $5000, determine the change in Avenger's cash balance during January and February
monthseparately and the cash balance at the end of January and February.
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