77. CSO: 1A4b LOS: 1A4x
Monroe Products is preparing a cash forecast based on the following information.
• Monthly sales: December $200,000; January $200,000; February $350,000;
March $400,000.
• All sales are on credit and collected the month following the sale.
• Purchases are 60% of next month’s sales and are paid for in the month of
purchase.
• Other monthly expenses are $25,000, including $5,000 of depreciation.
29
If the January beginning cash balance is $30,000, and Monroe is required to maintain a
minimum cash balance of $10,000, how much short-term borrowing will be required at
the end of February?
a. $60,000.
b. $70,000.
c. $75,000.
d. $80,000.
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