Buster Enterprises' Projected Sales for the First Six Months of 2010

Buster Enterprises' projected sales for the first six months of 2010 are given below:
40% of sales are collected in cash at time of sale,50% are collected in the month following the sale,and the remaining 10% are collected in the second month following the sale.Cost of goods sold is 60% 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 $40,000/month.The company's cash balance as of February 28,2010 will be $25,000.Excess cash will be used to retire short-term borrowing (if any) .Buster Enterprises has no short term borrowing as of February 28,2010.Assume that the interest rate on short-term borrowing is 1% per month.The company must have a minimum cash balance of $15,000 at the beginning of each month.What is Buster Enterprises' total cash receipts for April 2010?

A) $460,000
B) $490,000
C) $524,000
D) $560,000

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free