Projected sales for the coming year:
The collection history of the Hale Company has been as follows 20 % of sales are collected in the month of the sale. 60 % of the sales are collected in the month following the sale. 12 % of the sales are collected in the 2nd month following the sale. 5 % of the sales are collected in the 3rd month following the sale. The following information regarding costs is available: The cost of goods sold is 54 % of sales Items for sale are purchased in the month of the sale.
80 % of accounts payable are paid in the month following when the cost is incurred.
20 % of accounts payable are paid in the 2nd month following when the cost is incurred.
Wages are 28 % of sales and are paid currently
Annual general and administrative costs are $ 1,411,200 and are incurred evenly throughout the year.
Annual property taxes are $ 14,000 and are paid semi annually in June and October.
A $ 10,000 cash capital purchase will be made in April.
The beginning cash balance in April is expected to be $ 47,000. The Hale Company has a policy of maintaining a minimum cash balance of $ 45,000. The company has an arrangement with a local bank for a line of credit that carries a 10 % annual interest rate. If the ending