A Vancouver ﬁrm has a cash balance of $12,000 as of June 1. During the month they paid $16,000 on account, $13,000 for wages, and $1,000 for other expense items. The company maintains a
Minimum cash balance of $10,000. Sales for the ﬁrm for April, May, and June are $15,000, $22,000,
And $18,750, respectively. The company collects 40% of sales in the month of sale, 50% in the
Following month, and 10% in the second month following the month of sale. What is the cash surplus
Or deﬁcit as of June 30?

Question

Quizplus · Accepted Answer

The firm starts with $12,000 and pays out $30,000 ($16,000 + $13,000 + $1,000). Cash collected in June is $7,500 (40% of $18,750) + $11,000 (50% of $22,000) + $1,500 (10% of $15,000) = $20,000. Total cash available is $32,000 ($12,000 + $20,000). After payments, the balance is $2,000, which is $8,000 below the minimum required balance of $10,000, resulting in a deficit of $8,000.

A Vancouver ﬁRm Has a Cash Balance of $12,000 as of June