Question

​Hutchinson, Inc. provides the following data taken from its third quarter​ budget: Jul Aug Sep Cash collections $67,000 $43,000 $45,000 Cash​ payments: Purchases of direct materials 34,000 31 comma 00031,000 35 comma 00035,000 Operating expenses 11,000 20,000 22,000 Capital expenditures 35,000 6,000 The cash balance on June 30 is projected to be $14,000. Based on the above​ data, calculate the shortfall the company is projected to have at the end of August.

Answer 1

$ -13,000

Step-by-step explanation:

Cash shortfall of the company at the end of August (CS) can be calculated as below:

Cash shortfall = Cash balance at the end of June + (Cash inflows in July - Cash outflows in July) + (Cash inflows in August - Cash outflows in August)

= 14,000 + (67,000 - 34,000 - 11,000 - 35,000) + (43,000 - 31,000 - 20,000 - 6,000)

= -13,000