Buster Enterprises projected sales for the the first six months of 2008 are give

Question

Buster Enterprises projected sales for the the first six months of 2008 are given below:
30% of sales are collected in cash at time of sale,60% are colected 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 feb 28,2008 will be $30,000 borrowing (if any) Buster Enterprises has no short term borrowing as of Feb 28,2008. Assume that the interest rate on short term borrowing is 1% per month The cmpany must have a minimum cash baance of $20,000 at the beginning of each month What is buster Enterprises' earnings before interest and taxes for April 2008?

Explanation / Answer

85,000 (450,000 sales less 70% cost of sales(315,000), less 50,000 expenses)

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