Gerald's Produce provides quality fruits and vegetables to upscale restaurants in the tri-cities area. A sales forecast for Gerald's is shown on the top row of the table. Gerald makes 100% of his sales on credit. Gerald collects 50% of sales in the month following the sale, and the remaining 50% two months later. Gerald buys his produce in the same month as the sales. The cost of the fruits and vegetables is half of sales. Suppliers require Gerald to pay cash for his purchases. Gerald makes lease payments on his van of $500 per month, and gas costs him $100 per month. Gerald's Produce has a cash balance of $1,000 at the beginning of January.
| Sales Forecast and Cash Budget |
| | Nov | Dec | Jan | Feb | March |
| Sales Forecast | $20,000 | $15,000 | $5,000 | $15,000 | $20,000 |
| Collections from last month | | | | | |
| Collections from 2 months ago | | | | | |
| Total Cash Inflows | | | | | |
| | | | | | |
| Purchases From Suppliers | | | | | |
| Payments to Suppliers | | | | | |
| Van Lease Payments | $500 | $500 | $500 | $500 | $500 |
| Gas | $100 | $100 | $100 | $100 | $100 |
| Total disbursements | | | | | |
| | | | | | |
| Net Cash Flow | | | | | |
| | | | | | |
| Beginning cash balance | | | 1,000 | | |
| Plus: Net Cash Flows | | | | | |
| Ending Cash balance | | 1,000 | | | |
What are Gerald's purchases expected to be in February?
◦ $2,500
◦ $5,000
◦ $7,500
◦ $10,000
◦ $15,000
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