Austin Company has the following sales forecasts for the selected three-month period in the current year:
$$\begin{array} { l r }
\underline{\text { Month }} & \underline{\text { Sales }} \
\hline \text { April } & \$ 12,000 \
\text { May } & 7,000 \
\text { June } & 8,000
\end{array}$$ Collection pattern: 65% of sales are collected in the month of the sale,
35% is collected in the following month.
Accounts Receivable balance (April 1): $10,000
Cash balance (April 1): $5,000
Minimum cash balance is $5,000. Cash can be borrowed in $100 increments from the local bank (assume no interest charges).
Calculate the expected amount Austin Company will need to borrow from the bank balance at the end of April in order to maintain its minimum cash balance. Assume that cash is received only from customers and that $9,000 is paid out during April.

Question

Austin Company has the following sales forecasts for the selected three-month period in the current year:
 $$\begin{array} { l r } 
\underline{\text { Month }} & \underline{\text { Sales }} \
\hline \text { April } & \$ 12,000 \
\text { May } & 7,000 \
\text { June } & 8,000
\end{array}$$ Collection pattern: 65% of sales are collected in the month of the sale,
35% is collected in the following month.
Accounts Receivable balance (April 1): $10,000
Cash balance (April 1): $5,000
Minimum cash balance is $5,000. Cash can be borrowed in $100 increments from the local bank (assume no interest charges).
Calculate the expected amount Austin Company will need to borrow from the bank balance at the end of April in order to maintain its minimum cash balance. Assume that cash is received only from customers and that $9,000 is paid out during April.

Quizplus · Accepted Answer

The Answer of Austin Company has the following sales forecasts for the selected three-month period in the current year:
 $$\begin{array} { l r } 
\underline{\text { Month }} & \underline{\text { Sales }} \
\hline \text { April } & \$ 12,000 \
\text { May } & 7,000 \
\text { June } & 8,000
\end{array}$$ Collection pattern: 65% of sales are collected in the month of the sale,
35% is collected in the following month.
Accounts Receivable balance (April 1): $10,000
Cash balance (April 1): $5,000
Minimum cash balance is $5,000. Cash can be borrowed in $100 increments from the local bank (assume no interest charges).
Calculate the expected amount Austin Company will need to borrow from the bank balance at the end of April in order to maintain its minimum cash balance. Assume that cash is received only from customers and that $9,000 is paid out during April.

Austin Company Has the Following Sales Forecasts for the Selected