Silly Sally, Inc.
Silly Sally, Inc. forecasts the following sales levels: January, $420; February, $435; March, $450; and April, $470. Historically, 40% of its sales are for cash. Of the remaining sales, 80% are collected in one month, 15% are collected in the second month, while the rest remain uncollected. November sales were $380 and December sales were $500. (all values $000)
Purchases are made at 60% of the next month's sales forecast, and are paid for in the month of purchase. Other cash outlays are: rent, $10 monthly; wages and salaries, $50 monthly; a tax payment of $30 in March; an interest payment of $15 in March; and a planned purchase of $20 of new fixed assets in January.
-Suppose Silly Sally,Inc.forecasts an ending cash balance of $20,its minimum desired balance,in January.If February's forecasted cash expenditures are $400,which of the following describes the changes to Silly Sally's cash balance and level of borrowing,if any,related to its minimum cash balance,at the end of February?

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The Answer of Silly Sally, Inc.
Silly Sally, Inc. forecasts the following sales levels: January, $420; February, $435; March, $450; and April, $470. Historically, 40% of its sales are for cash. Of the remaining sales, 80% are collected in one month, 15% are collected in the second month, while the rest remain uncollected. November sales were $380 and December sales were $500. (all values $000)
Purchases are made at 60% of the next month's sales forecast, and are paid for in the month of purchase. Other cash outlays are: rent, $10 monthly; wages and salaries, $50 monthly; a tax payment of $30 in March; an interest payment of $15 in March; and a planned purchase of $20 of new fixed assets in January.
-Suppose Silly Sally,Inc.forecasts an ending cash balance of $20,its minimum desired balance,in January.If February's forecasted cash expenditures are $400,which of the following describes the changes to Silly Sally's cash balance and level of borrowing,if any,related to its minimum cash balance,at the end of February?

Silly Sally, Inc. Silly Sally, Inc. Forecasts the Following Sales Levels: January, $420;