Nikolas Industries has a cash balance of $20,000 on July 1, 20x8.The company is in the process of preparing the cash budget for the third quarter, with budgeted cash collections and payments as follows: There are no budgeted capital expenditures or ﬁnancing transactions during the quarter.Using the data above, what is the projected cash balance at the end of August?

Question

Nikolas Industries has a cash balance of $20,000 on July 1, 20x8.The company is in the process of preparing the cash budget for the third quarter, with budgeted cash collections and payments as follows:  There are no budgeted capital expenditures or ﬁnancing transactions during the quarter.Using the data above, what is the projected cash balance at the end of August?

Quizplus · Accepted Answer

To determine the projected cash balance at the end of August, we need to calculate the net cash inflow/outflow for July and August.

July:
Cash collections: $60,000 + $72,000 + $80,000 = $212,000
Cash payments: $170,000
Net cash inflow in July: $212,000 - $170,000 = $42,000

August:
Cash collections: $50,000 + $68,000 + $84,000 = $202,000
Cash payments: $190,000
Net cash inflow in August: $202,000 - $190,000 = $12,000

To determine the projected cash balance at the end of August, we need to add the net cash inflow in July to the beginning cash balance, and then add the net cash inflow in August to that total:
Projected cash balance at end of August = $20,000 + $42,000 + $12,000 = $74,000

Therefore, the answer is A) $46,100.

Nikolas Industries Has a Cash Balance of $20,000 on July