Question

The San Antonio Boat Company had a cash balance of $10 million at the beginning of 2020. During 2020, Sales were $5 million and expenses were $2 million. Therefore

a)the cash balance at the end of 2020 is $4 million.
b)the cash balance at the end of 2020 cannot be determined from the information given.
c)the cash balance at the end of 2020 must be greater than $3 million.
d)the cash balance at the end of 2020 must be less than $11 million.

Answer 1

The cash balance at the end of 2020 is $13 million.

Step-by-step explanation:

The San Antonio Boat Company had a cash balance of $10 million at the beginning of 2020. Given that the sales were $5 million and expenses were $2 million, we can determine the cash balance at the end of 2020 by considering the net cash flow. Net cash flow is calculated by subtracting expenses from sales, so in this case, it would be $5 million - $2 million = $3 million. To find the cash balance at the end of 2020, we need to add this net cash flow of $3 million to the beginning cash balance of $10 million. Therefore, the cash balance at the end of 2020 is $10 million + $3 million = $13 million. Therefore, the correct option is a)the cash balance at the end of 2020 is $4 million.