Fulkron Manufacturing provides the following data excerpted from its 3rd quarter budget: $\begin{array}{|l|l|r|r|}
\hline&{\text { Jul }} & \text { Aug } &{\text { Sep }} \
\hline \text { Cash collections } & \$ 66,000 & \$ 42,000 & \$ 45,000 \
\hline \text { Cash payments: } & & & \\hline \text { Purchases of inventory } & 50,000 & 48,000 & 25,000 \
\hline \text { Operating expenses } & 10,000 & 15,000 & 20,000 \
\hline \text { Capital expenditures } & 0 & 32,000 & 6,000\
\hline
\end{array}$ The cash balance on June 30 is projected to be $10,000.
-Based on the above data, calculate the shortfall the company is projected to have at the end of September.

Question

Fulkron Manufacturing provides the following data excerpted from its 3rd quarter budget: $\begin{array}{|l|l|r|r|} 
\hline&{\text { Jul }} & \text { Aug } &{\text { Sep }} \
\hline \text { Cash collections } & \$ 66,000 & \$ 42,000 & \$ 45,000 \
\hline \text { Cash payments: } & & & \\hline \text { Purchases of inventory } & 50,000 & 48,000 & 25,000 \
\hline \text { Operating expenses } & 10,000 & 15,000 & 20,000 \
\hline \text { Capital expenditures } & 0 & 32,000 & 6,000\
\hline
\end{array}$ The cash balance on June 30 is projected to be $10,000. 
-Based on the above data, calculate the shortfall the company is projected to have at the end of September.

Quizplus · Accepted Answer

The shortfall is the excess of cash payments over cash collections. The total cash payments for the 3rd quarter are $50,000 + $48,000 + $25,000 + $32,000 + $6,000 = $161,000. The total cash collections for the 3rd quarter are $66,000 + $42,000 + $45,000 = $153,000. Therefore, the shortfall is $161,000 - $153,000 = $8,000. Adding the beginning cash balance of $10,000, the projected cash balance at the end of September is $10,000 + $153,000 - $161,000 = -$43,000.

Fulkron Manufacturing Provides the Following Data Excerpted from Its 3rd