Reference no: EM132966496
Question - The following information for the second quarter of 2011 pertains to Huffington Company:
Month Sales Purchases
April $90,000 $48,000
May $120,000 $60,000
June $150,000 $84,000
Cash is collected from customers in the following manner:
Month of sale 30%
Month following the sale 70%
40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
Labor costs are 20% of sales. Other operating costs are $45,000 per month (including $12,000 of depreciation). Both of these are paid in the month incurred.
The cash balance on June 1 is $6,000. A minimum cash balance of $4,500 is required at the end of the month. Money can be borrowed in multiples of $3,000.
No loans outstanding on June 1.
1) How much cash will be collected from customers in June?
A. $129,000
B. $114,000
C. $150,000
D. None of the above is correct.
2) How much cash will be paid to suppliers in June?
A) None of the above is correct.
B) $88,000
C) $69,600
D) $56,000
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