ainbow, Inc. began operations on January 1 of the current year with a $12,800 cash balance. Fifty percent of sales are collected in the month of sale; 50% are collected in the month following sale. Similarly, 10% of purchases are paid in the month of purchase, and 90% are paid in the month following purchase. The following data apply to January and February:     January February Sales $ 43,000   $ 63,000   Purchases   34,000     48,000   Operating expenses   7,800     9,800       If operating expenses are paid in the month incurred and include monthly depreciation charges of $3,300, determine the change in Rainbow’s cash balance during February.   Multiple Choice   $7,800 increase.   $11,100 increase.   $16,900 increase.   $20,200 increase.   None of the answers is correct.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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MC Qu. 9-80 Rainbow, Inc. began operations on January...

 

Rainbow, Inc. began operations on January 1 of the current year with a $12,800 cash balance. Fifty percent of sales are collected in the month of sale; 50% are collected in the month following sale. Similarly, 10% of purchases are paid in the month of purchase, and 90% are paid in the month following purchase. The following data apply to January and February:

 

  January February
Sales $ 43,000   $ 63,000  
Purchases   34,000     48,000  
Operating expenses   7,800     9,800  
 

 

If operating expenses are paid in the month incurred and include monthly depreciation charges of $3,300, determine the change in Rainbow’s cash balance during February.

 

Multiple Choice
  •  
    $7,800 increase.
  •  
    $11,100 increase.
  •  
    $16,900 increase.
  •  
    $20,200 increase.
  •  
    None of the answers is correct.
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