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Question
Plato Industries' projected sales for the first six months of 2012 are given below:| Jan. | $250,000 | April | $300,000 |
| Feb. | $340,000 | May | $350,000 |
| Mar. | $280,000 | June | $380,000 |
20% of sales are collected in cash at time of sale, 50% are collected in the month following the sale, and the remaining 30% are collected in the second month following the sale. Cost of goods sold is 85% of sales. Purchases are made in the month prior to the sales, and payments for purchases are made in the month of the sale. Total other cash expenses are $70,000/month. The company's cash balance as of February 28, 2012 will be $10,000. Excess cash will be used to retire short-term borrowing (if any). Plato has no short term borrowing as of February 28, 2012. Ignore any interest on short-term borrowing. The company must have a minimum cash balance of $40,000 at the beginning of each month. What is Plato Industries' ending cash balance (before borrowing) in March?
A) $12,000
B) $8,000
C) $3,000
D) ($28,000)
Answer
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