Plato Industries' projected sales for the first six months of 2012 are given below:
Jan. $250,000 April $300,000
Feb. $340,000 May $350,000
Mar. $280,000 June $380,000
20% of sales are collected in cash at time of sale, 50% are collected in the month following the sale,
and the remaining 30% are collected in the second month following the sale. Cost of goods sold is
85% 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 $70,000/month. The company's cash
balance as of February 28, 2012 will be $10,000. Excess cash will be used to retire short-term
borrowing (if any). Plato has no short term borrowing as of February 28, 2012. Ignore any interest
on short-term borrowing. The company must have a minimum cash balance of $40,000 at the
beginning of each month. Plato's projected cumulative short-term borrowing as of April 30, 2012?
A) $33,000 B) $60,000 C) $25,000 D) $50,000
B
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