Blue Company has the following sales forecasts for the first three months of the current year:
$$\begin{array} { l r }
\underline{\text { Month }} & \underline{\text { Sales }} \
\text { January } & \$ 10,000 \
\text { February } & 6,000 \
\text { March } & 10,000
\end{array}$$ Collection pattern: 75% of sales are collected in the month of the sale,
25% is collected in the following month.
Accounts Receivable balance (January 1): $4,000
Cash balance (January 1): $3,000
Minimum cash balance is $5,000. Cash can be borrowed in $500 increments from the local bank (assume no interest charges).
Calculate the expected amount Blue Company will need to borrow from the bank at the end of January in order to maintain its minimum cash balance. Assume that cash is received only from customers and that $14,000 is paid out during January.

Question

Blue Company has the following sales forecasts for the first three months of the current year:
 $$\begin{array} { l r } 
\underline{\text { Month }} & \underline{\text { Sales }} \
\text { January } & \$ 10,000 \
\text { February } & 6,000 \
\text { March } & 10,000
\end{array}$$ Collection pattern: 75% of sales are collected in the month of the sale,
25% is collected in the following month.
Accounts Receivable balance (January 1): $4,000
Cash balance (January 1): $3,000
Minimum cash balance is $5,000. Cash can be borrowed in $500 increments from the local bank (assume no interest charges).
Calculate the expected amount Blue Company will need to borrow from the bank at the end of January in order to maintain its minimum cash balance. Assume that cash is received only from customers and that $14,000 is paid out during January.

Quizplus · Accepted Answer

The Answer of Blue Company has the following sales forecasts for the first three months of the current year:
 $$\begin{array} { l r } 
\underline{\text { Month }} & \underline{\text { Sales }} \
\text { January } & \$ 10,000 \
\text { February } & 6,000 \
\text { March } & 10,000
\end{array}$$ Collection pattern: 75% of sales are collected in the month of the sale,
25% is collected in the following month.
Accounts Receivable balance (January 1): $4,000
Cash balance (January 1): $3,000
Minimum cash balance is $5,000. Cash can be borrowed in $500 increments from the local bank (assume no interest charges).
Calculate the expected amount Blue Company will need to borrow from the bank at the end of January in order to maintain its minimum cash balance. Assume that cash is received only from customers and that $14,000 is paid out during January.

Blue Company Has the Following Sales Forecasts for the First