Nyree Company is preparing its budget for the third quarter.The cash balance on June 30 was $34,000.Additional budgeted data are provided here: What amount should be shown in the cash budget for the cash balance at the end of July?

Question

Nyree Company is preparing its budget for the third quarter.The cash balance on June 30 was $34,000.Additional budgeted data are provided here:  What amount should be shown in the cash budget for the cash balance at the end of July?

Quizplus · Accepted Answer

To determine the cash balance at the end of July, we need to calculate the total inflows and outflows for the month of July.

From the budgeted data given, we know that:
- Total collections in July will be $133,000
- Total payments for materials in July will be $79,000
- Total labor and overhead expenses in July will be $41,000
- The purchase of a new machine for $7,500 will be made in July

So the total outflows for July will be: 
$79,000 + $41,000 + $7,500 = $127,500

To calculate the total inflows for July, we need to consider the following:
- The beginning cash balance on July 1 is $34,000
- Collections from sales in June, which will be received in July, are $97,000
- The company will borrow $25,000 in July

So the total inflows for July will be:
$34,000 + $97,000 + $25,000 = $156,000

To determine the cash balance at the end of July, we subtract the total outflows from the total inflows:
$156,000 - $127,500 = $28,500

Therefore, the amount that should be shown in the cash budget for the cash balance at the end of July is $30,000 (rounded to the nearest thousand).

Nyree Company Is Preparing Its Budget for the Third Quarter