Sipan Retail Company was recently created with a beginning cash balance of $12,000. The owner expects the following for the first month of operations:
Cash sales to customers $8,000
Sales on account to customers $30,000
Cash collected from account customers $12,000
Cost of merchandise purchased $35,000
Cash paid for merchandise purchased $24,500
Cost of merchandise sold $26,600
Cash paid for display cases $9,600
Selling and administrative expenses $4,000
The display cases above were purchased at the beginning of the month and are being depreciated at a rate of $200 per month. This amount is included in the selling and administrative expenses figure above. All other selling and administrative expenses are paid as incurred. Sipan wants to maintain a cash balance of $10,000. Any amount below this can be borrowed from a local bank as needed in increments of $1,000. All borrowings are made at month end.
75. In Sipan's cash budget for this first month, how much money will Sipan need to borrow at month end?
A) $7,000
B) $16,000
C) $17,000
D) $28,000
76 In Sipan's budgeted income statement for this first month, what will net income (loss) be for this first month?
A) $(1,000)
B) $(2,000)
C) $7,400
D) $9,500