Question

A company has a beginning cash of $6,000, cash receipts of $12,000, cash payments of $7,200, and an outstanding of $1,500. Their preliminary cash balance is...

a) $9,300
b) $9,800
c) $11,700
d) $13,200

Answer 1

The preliminary cash balance is found by adding the beginning cash of $6,000 to cash receipts of $12,000, then subtracting cash payments of $7,200. The correct preliminary cash balance should be $10,800, which is not listed in the options provided.

Step-by-step explanation:

The student has asked about calculating a company's preliminary cash balance given a set of financial figures. The calculation involves summing the beginning cash with cash receipts and then subtracting the cash payments. The amount outstanding does not play a role in calculating the preliminary cash balance. Thus, the preliminary cash balance can be calculated as follows:

Beginning Cash + Cash Receipts - Cash Payments = Preliminary Cash Balance

$6,000 + $12,000 - $7,200 = $10,800

Therefore, the options provided do not contain the correct preliminary cash balance, which is $10,800.