3 Badlands collected 30 of Februarys sales in February or 70500 Thus Februarys

# 3 badlands collected 30 of februarys sales in

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3. Badlands collected 30% of February’s sales in February, or \$70,500. Thus, February’s sales total \$235,000 (\$70,500 ÷ 0.30). Combining January sales (\$91,000 + \$144,000), February sales (\$235,000), and March sales (\$175,000), the company will report revenue of \$645,000. 4. Seventy percent of March’s sales will be outstanding, or \$122,500 (\$175,000 × 70%). 5. Finished-goods inventories are maintained at 30% of the following month’s sales. January sales total \$235,000 (\$91,000 + \$144,000), or 9,400 units (\$235,000 ÷ \$25). Thus, the December 31 inventory is 2,820 units (9,400 × 30%). 6. February sales will total 9,400 units (\$235,000 ÷ \$25), giving rise to a January 31 inventory of 2,820 units (9,400 × 30%). Letting X denote production, then: 12/31/x0 inventory + X – January 20x1 sales = 1/31/x1 inventory 2,820 + X – 9,400 = 2,820 X – 6,580 = 2,820 X = 9,400
7. Financing required is \$6,000 (\$21,000 minimum balance – \$15,000 ending balance): Cash balance, January 1 \$ 24,000 Add: January receipts (\$105,000 + \$91,000) 196,000 Subtotal \$220,000 Less: January payments 205,000 Cash balance before financing \$ 15,000

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