An enterprise\'s projected sales for the first six months of 2008 are given belo
ID: 2447126 • Letter: A
Question
An enterprise's projected sales for the first six months of 2008 are given below: * Jan. $400,000 * Feb. $540,000 * Mar. $350,000 * Apr. $450,000 * May $480,000 * Jun. $520,000 30% of sales are collected in cash at the time of sale, 60% are collected in the month following the sale, and the remaining 10% are collected in the second month following the sale. Cost of goods sold is 70% 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 $50,000/month. The company's cash balance as of February 28, 2008 will be $30,000. Excess cash will be used to retire short-term borrowing (if any). The enterprise has no-short term borrowing as of February 28, 2008. Assume that the interest rate on short-term borrowing is 1% per month. The company must have a minimum cash balance of $20,000 at the beginning of each month. What is the enterprises' earning before interest and taxes for April 2008? * $ 85,000 or * $159,000 or * $138,000 or * $135,000
Explanation / Answer
$159,000