How much cash will be disbursed in total in March?

ACCOUNTING

Multiple Choice

The following information pertains to Tiffany Company:


Month Sales Purchases

January $30,000 $16,000

February $40,000 $20,000

March $50,000 $28,000



· Cash is collected from customers in the following manner:

Month of sale 30%

Month following the sale 70%

· 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 $15,000 per month (including $4,000 of depreciation). Both of these are paid in the month incurred.

· The cash balance on March 1 is $4,000. A minimum cash balance of $3,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.


How much cash will be disbursed in total in March?

a. $21,000

b. $25,000

c. $44,200

d. $48,200

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