Question

Tadeo Corp. has provided a part of its budget for the second​ quarter: Apr May Jun Cash collections $ 43 comma 000 $ 43 comma 000 $ 40 comma 000 Cash​ payments: Purchases of direct materials 6 comma 000 7 comma 200 6 comma 000 Operating expenses 7 comma 200 7 comma 000 7 comma 200 Capital expenditures 4 comma 600 4 comma 000 10 comma 000 The cash balance on April 1 is $ 12 comma 000. Assume that there will be no financing transactions or costs during the quarter. Calculate the projected cash balance at the end of May. A. $ 18 comma 200 B. $ 55 comma 000 C. $ 62 comma 000 D. $ 80 comma 200 g

Answer 1

C. $ 62 comma 000

Step-by-step explanation:

The movement in cash balance between the start and end of a period is the difference between the cash received and paid over the period. As such, this may be expressed mathematically as

Opening balance + Cash received - Cash paid = Closing balance

For the month of May, the opening cash balance is same as the closing balance for the end of April.

Hence projected cash balance for the end of April

= $12,000 + $43,000 - $6,000 - $7,200 - $4,600

= $37,200

For May

= $37,200 + $43,000 - $7,200 - $7,000 - $4,000

= $62,000