The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase. In March 2019, credit sales were $561,000.

                                                              April      May        June

Beginning cash balance             182,000    264,650     434,150

Cash collections from credit sales   577,750         622,700     621,650  

Total cash available                     759,750         887,350  1,055,800

Purchases                                   -289,000       -302,000   -282,000

Wages, taxes and expenses     -137,000        -129,000    -179,000  

Interest                                 -15,600          -15,600      -15,600

Equipment purchases       -53,500           -6,600    -248,000

Total cash disbursements          -495,100      -453,200     -724,600

Ending cash balance                  $264,650       $434,150     $331,200

Explanation:

cash collections:

March = (60% x $561,000) + (35% x $689,000) = $577,750

April = (60% x $689,000) + (35% x $598,000) = $622,700

May = (60% x $598,000) + (35% x $751,000) = $621,650

answer; i believe the correct answer is (business necessity defense;