Coastal Coffee Distributors Ltd

Coastal Coffee Distributors Ltd. has sales revenue of $750,000, $850,000, $550,000 and $450,000 from June through September. The company's collection pattern is to collect 20% of sales in the first 30 days, 70% in the next 30 days and 10% in the 30 days after that. There are monthly interest and fixed expenses of $245,500. Variable costs which equal 55% of Sales Revenue comprise accounts payable and are paid the month after they are incurred. There is a cash surplus in July of $49,000. In August the company will require a $90,000 down payment for new vehicles being purchased and in September it will make a 3rd quarter income tax payment of $16,500. After generating the Cash Flow Budget, what will be September's cash balance?

A) Surplus of $21,500
B) Surplus of $127,000
C) Surplus of $241,500
D) Shortfall of $27,500
E) Shortfall of $53,500

Correct Answer:

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