Question

The following information pertains to Hepburn Company:

Month	Sales	Purchases
January	$66,000	$40,000
February	$84,000	$49,000
March	$102,000	$60,000

cash is collected from customers in the following manner :

month of sale 40%

month following the sale 60%

45% 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 $33,000 per month (including $9000 of depreciation) both of these are pad in the month incurred.

the cash balance on March 1 is $10,000. a minimum cash balance of $6,000 is required at the end of the month . money can be borrowed in multiples of $ 1, 000.

How much cash will be paid to suppliers in March ?

Answer 1

Answer

Cash paid to suuplier in March:
45% of March purchases [$60000 x 45%]	$27,000
55% of February purchases [$49000 x 55%]	$26,950
Total Cash paid to suppliers in March	$53,950	Answer