The following information for the second quarter of 2011 pertains to Huffington Company:

•Cash is collected from customers in the following manner:

•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 $45,000 per month (including $12,000 of depreciation). Both of these are paid in the month incurred.
•The cash balance on June 1 is $6,000. A minimum cash balance of $4,500 is required at the end of the month. Money can be borrowed in multiples of $3,000.
•No loans outstanding on June 1.
-How much cash will be collected from customers in June?
A)$129,000
B)$141,000
C)$150,000
D)None of the above is correct.

Question

The following information for the second quarter of 2011 pertains to Huffington Company:
  
•Cash is collected from customers in the following manner:
  
•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 $45,000 per month (including $12,000 of depreciation). Both of these are paid in the month incurred.
•The cash balance on June 1 is $6,000. A minimum cash balance of $4,500 is required at the end of the month. Money can be borrowed in multiples of $3,000.
•No loans outstanding on June 1.
-How much cash will be collected from customers in June?
A)$129,000 
B)$141,000 
C)$150,000 
D)None of the above is correct.

Quizplus · Accepted Answer

A)(May sales $120,000 × 70% = $84,000)+ (June sales $150,000 × 30% = $45,000)= $129,000

The Following Information for the Second Quarter of 2011 Pertains