Doral Corp.has provided a part of its budget for the third quarter: The cash balance on July 1 is $12,000.Assume that there will be no ﬁnancing transactions or costs during the quarter.What is the cash balance at the end of September?

Question

Doral Corp.has provided a part of its budget for the third quarter:  The cash balance on July 1 is $12,000.Assume that there will be no ﬁnancing transactions or costs during the quarter.What is the cash balance at the end of September?

Quizplus · Accepted Answer

To find the cash balance at the end of September, we need to add up all the inflows and subtract all the outflows during the quarter.

Inflows:
- Cash receipts from customers: $300,000
- Sale of investments: $80,000
- Proceeds from sale of equipment: $20,000
- Total inflows: $400,000

Outflows:
- Payments to suppliers: $150,000
- Salaries and wages: $90,000
- Rent: $20,000
- Equipment purchase: $60,000
- Taxes: $5,000
- Total outflows: $325,000

To get the cash balance at the end of September, we add the total inflows ($400,000) to the beginning cash balance ($12,000) and subtract the total outflows ($325,000):

$12,000 + $400,000 - $325,000 = $85,700

Therefore, the answer is C.