The following information for the second quarter of 2011 pertains to Huffington Company:

•Cash is collected from customers in the following manner:

•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.
-What is the ending cash balance for June?
A)($50,000)
B)$6,000
C)$5,400
D)$11,400

Question

The following information for the second quarter of 2011 pertains to Huffington Company:
  
•Cash is collected from customers in the following manner:
  
•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.
-What is the ending cash balance for June?
A)($50,000) 
B)$6,000 
C)$5,400 
D)$11,400

Quizplus · Accepted Answer

C)(Cash June 1 $6,000 + cash collected from customers +$129,000 (See No. 66)- cash paid to suppliers $69,600 (See No. 67)- operating expenses paid $63,000 (See No. 68)= $8,400 + borrowed for minimum balance $3,000 = $5,400

The Following Information for the Second Quarter of 2011 Pertains