Question

Cool​ Water, Inc. sells bottled water. The firm keeps in inventory plastic bottles at10​% of the...

Cool​ Water, Inc. sells bottled water. The firm keeps in inventory plastic bottles at10​%

of the monthly projected sales. These plastic bottles cost

​$0.006

each. The monthly sales for the first four months of the coming year are as​ follows:

​January 2,200,000

​February:  2,200,000

​March: 2,700,000

​April: 3,200,000
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Homework Answers

Answer #1

COGS = Monthly Sales × $0.006

Beginning Inventory Balance = Current Month’s Sales Projection x 10%

Ending Inventory Balance = Next Month’s Sales Projection x 10%

Increase in Working Capital Cash = [Ending Inventory - Beginning Inventory] x $0.006

Month Exp. Sales(Units) Ant. COGS Beg. Inv. Bal. End. Inv. Bal. W. Cap. Increase
January 2,200,000 $13,200 220,000 220,000 $0
February 2,200,000 $13,200 220,000 270,000 $300
March 2,700,000 $16,200 270,000 320,000 $300
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