Question - Wolfe, Inc., began operations on January 1 of the current year with a $12,000 cash balance. Forty percent of sales are collected in the month of sale; 60% are collected in the month following sale. Similarly, 20% of purchases are paid in the month of purchase, and 80% are paid in the month following purchase. The following data apply to January and February:
January = Sales 35,000
Purchases 30,000
Operating Expenses 7,000
February=Sales 55,000
Purchases 40,000
Operating Expenses 9,000
If operating expenses are paid in the month incurred and include monthly depreciation charges of $2,500, determine the change in Wolfe's cash balance during February.