Magenta Corporation has the following sales forecasts for the selected three-month period for the current year: Month Sales July $30,000 August 15,000 September 12,000 All sales are on account. Sixty percent of sales are collected in the month of the sale, and the remainder are collected in the following month. Accounts receivable balance (July 1) $28,000 Cash balance (July 1) 17,000 Minimum cash balance is $13,000. Cash can be borrowed in $2,000 increments from the local bank (assume no interest charges). What is the cash balance at the end of July, assuming that cash is received only from customers and that $53,000 is paid out during July? a.$18,500 b.$14,000 c.$25,000 d.$20,200
Magenta Corporation has the following sales forecasts for the selected three-month period for the current year: Month Sales July $30,000 August 15,000 September 12,000 All sales are on account. Sixty percent of sales are collected in the month of the sale, and the remainder are collected in the following month. Accounts receivable balance (July 1) $28,000 Cash balance (July 1) 17,000 Minimum cash balance is $13,000. Cash can be borrowed in $2,000 increments from the local bank (assume no interest charges). What is the cash balance at the end of July, assuming that cash is received only from customers and that $53,000 is paid out during July? a.$18,500 b.$14,000 c.$25,000 d.$20,200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Magenta Corporation has the following sales forecasts for the selected three-month period for the current year:
All sales are on account. Sixty percent of sales are collected in the month of the sale, and the remainder are collected in the following month.
Minimum cash balance is $13,000. Cash can be borrowed in $2,000 increments from the local bank (assume no interest charges).
What is the cash balance at the end of July, assuming that cash is received only from customers and that $53,000 is paid out during July?
| Month | Sales |
| July | $30,000 |
| August | 15,000 |
| September | 12,000 |
All sales are on account. Sixty percent of sales are collected in the month of the sale, and the remainder are collected in the following month.
| $28,000 | |
| Cash balance (July 1) | 17,000 |
Minimum cash balance is $13,000. Cash can be borrowed in $2,000 increments from the local bank (assume no interest charges).
What is the cash balance at the end of July, assuming that cash is received only from customers and that $53,000 is paid out during July?
a.$18,500
b.$14,000
c.$25,000
d.$20,200
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