Biology Forums - Study Force

Plato Industries' projected sales for the first six months of 2012 are given below:

Jan.$250,000April$300,000
Feb.$340,000May$350,000
Mar.$280,000June$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 EBIT for March 2012?
A) $42,000
B) $23,000
C) ($28,000)
D) ($60,000)

 C
 

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