Table 1 Dunder Company's Projected Sales for the First Six Months of Months

question 21

Multiple Choice

Table 1
Dunder Company's projected sales for the first six months of 2017 are given below:
25% of sales is collected in cash at the time of the sale, 50% is collected in the month following the sale and the remaining 25% is collected in the second month following the sale.Cost of goods sold is 75% of sales.Purchases are made in the month prior to the sale, and payments for purchases are made in the month of the sale.Total other cash expenses are $60,000/month.The company's cash balance as of February 28, 2017, will be $40,000.Excess cash will be used to retire short-term borrowing (if any) .Dunder has no short-term borrowing as of February 28, 2017.Assume that the interest rate on short-term borrowing is 1% per month.The company must have a minimum cash balance of $25,000 at the beginning of each month.Round all answers to the nearest $100.
-Based on the information in Table 1, what is Dunder Company's projected EBIT for March 2017?

• A)($10,000)
• B)($30,000)
• C)$70,000
• D)None of the above

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