Question

Use the following information to determine the ending cash balance to be reported on the month ended June 30 cash budget.

Beginning cash balance on June 1, $94,400.
Cash receipts from sales, $415,000.
Budgeted cash payments for purchases, $270,000.
Budgeted cash payments for salaries, $95,400.
Other budgeted cash expenses, $57,400.
Cash repayment of bank loan, $32,400.
Budgeted depreciation expense, $34,400.

Answer 1

The ending cash balance on the month ended June 30 cash budget: $54,200

Step-by-step explanation:

Ending cash balance = Beginning cash balance + Cash flow in - Cash flow out

In the company:

Cash flow in = Cash receipts from sales = $415,000

Cash flow out = Cash payments for purchases + Cash payments for salaries + Other cash expenses + Cash repayment of bank loan = $270,000 + $95,400 + $57,400 + $32,400 = $455,200

Ending cash balance = $94,400 + $415,000 - $455,200 = $54,200

Note: Depreciation is a non-cash accounting expense, so it doesn't involve cash flow.