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?

Question

Cecelia Orozco

Business

23 April, 15:45

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?

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Answers (1)

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Mercedes Nicholson · Answer 1

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

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