Question

Month January February March Sales $64,000 $82,000 $109,000 Purchases $35,000 $50,000 $65,000 Cash is collected from customers in the following manner: Month of sale 30% Month following the sale 70% 50% 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 $31,000 per month (including $10,000 of depreciation). Both of these are paid in the month incurred. The cash balance on March 1 is $27,100. A minimum cash balance of $7,000 is required at the end of the month. Money can be borrowed in multiples of $1,000. in the monthning of 1,000. • What is the ending cash balance for March? O A. $6,000 OB. $13,000 OC. $7,000 O D. $27,100

Answer 1

Answer- The ending cash balance for march is =$7000.

Explanation-

CASH BUDGET
For The Month of March
Particulars	Amount
	$
Opening cash balance	27100
Add- Collection from customers
March sales collection	109000*30%= 32700
February sales collection	82000*70%= 57400
Total cash available (a)	117200
Less- Cash payment for purchase
March month purchases	65000*50%= 32500
February month purchases	50000*50%= 25000
Less- Labor costs	109000*30%= 32700
Less- Other operating costs	30000
excluding depreciation
Total cash payments (b)	120200
Excess of cash payments over cash available (c=a-b)	-3000
Add- Amount borrowed	10000
Closing cash balance	7000