Parker, Inc. has a cash balance of $20,000 on April 1. The company is now preparing the cash...
Question:
Parker, Inc. has a cash balance of $20,000 on April 1. The company is now preparing the cash budget for the second quarter. Budgeted cash collections and payments are as follows:
| Apr. | May | Jun. | |
|---|---|---|---|
| Cash collections | $25,000 | $24,000 | $24,000 |
| Cash payments: | |||
| Purchases of direct materials | 4,000 | 5,300 | 6,200 |
| Operating expenses | 5,300 | 6,000 | 5,300 |
There are no budgeted capital expenditures during the quarter.
Based on the above data, calculate the projected cash balance at the end of April.
A. $41,000
B. $35,700
C. $45,000
D. $25,000
Cash Budget:
A company prepares a cash budget to estimate its cash collections and payments. This helps a company estimate how much cash they'll have on hand at the end of a month, a quarter, a year, etc. to use to pay down debt, purchase equipment, invest, etc.
Answer and Explanation: 1
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The projected cash balance at the end of April is B. $35,700.
The ending cash balance can be calculated as:
- Ending cash balance = Beginning cash...
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