Question

Philip Morris expects the sales for his clothing company to be $620,000 next year. Philip notes that net assets (Assets − Liabilities) will remain unchanged. His clothing firm will enjoy a 9 percent return on total sales. He will start the year with $220,000 in the bank. What will Philip's ending cash balance be?

Answer 1

Philip's ending cash balance will be $275,800

Step-by-step explanation:

Ending cash balance = Beginning bank balance + Return on sales

= $220,000 + $(620,000*9%)

= $220,000 + $55800

= $275,800

Therefore, Philip's ending cash balance will be $275,800