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# Ending cash balance for Tiffany Company

Use the information below to answer the following question(s).

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.

What is the ending cash balance for March?

a. a. \$3,000
b. b. \$3,800
c. c. \$28,000
d. d. \$3,200

#### Solution Preview

=Opening Balance+Cash collections-Closing cash

= 4000+ (40000*.7+50000*.3)- (20000*.6+28000*.4+.2*50000+11000)
=\$2800 +1000 ...

#### Solution Summary

This provides the steps to calculate the ending cash balance

\$2.19