Answer :
The projected balance of cash at the end of August is $38,000. The correct option is D.
To calculate the projected balance of cash at the end of August, we need to consider the cash balance at the beginning of the month, cash collections, and cash payments for August.
Given that the cash balance on July 31 was $32,000.00, we start with this amount.
Cash collections for August are $52,000.00, which means this amount is added to the cash balance.
Next, we consider cash payments for August, which include purchases of direct materials and operating expenses. The total cash payments for August are $20,000 (purchases of direct materials) + $26,000 (operating expenses) = $46,000.00. This amount is subtracted from the cash balance.
Finally, we calculate the projected balance of cash at the end of August by adding the cash collections and subtracting the cash payments from the beginning cash balance:
Projected cash balance at the end of August = Beginning cash balance + Cash collections - Cash payments
= $32,000 + $52,000 - $46,000
= $38,000
Therefore, correct option is D.
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Complete question is:
Berman Company is preparing its budget for the third quarter. Cash balance on July 31 was $32,000.00. Assume there is no minimum balance of cash required and no borrowing is undertaken. Additional budgeted data are provided here:
July Aug Sep
Cash collections $51,000.00 $52,000.00 $50,000.00
Cash payments
Purchases of direct materials 23,000 20,000 24,000
Operating expenses 32,000 26,000 22,000
Capital expenditures 7,000 9,000 13,000
Calculate the projected balance of cash at the end of August.
A. $23000
B. $29000
C. $107000
OD. $38000
