Fielding Wilderness Outfitters Had Projected its sales for the first six months

Question

Fielding Wilderness Outfitters Had Projected its sales for the first six months of 2008 to be as follows:

Jan. $50,000 April $180,000
Feb. $60,000 May $240,000
Mar. $100,000 June $240,000

Cost of goods sold is 60% of sales. Purchases are made and paid for two months prior to the sale. 40% are collected in the month of sale, 40% are collected in the month following the sale, and the remaining 20$ in the second month following the sale. Total other cash expenses are $40,000/month. the company's cash balance as of March 1, 2008 is projected to be $40,000 and the company wants to maintain a minimum cash balance of $15,000. Excess cash will be used to retire short-term borrrowing if any exists. Fielding has no short term borrowing as of March 1, 2008 Assume that the interest rate on short-term borrowing is 1% per month what was Fielding's projected loss For March?

A. $84,000
B. $110,000
C. $184,000
D. None

Explanation / Answer

A. $84,000

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