Sales for RAJ Inc. from March to June were $190,000, $200,000, $323,000 and $340,000, respectively. 10% are cash sales and 80% of the invoices are paid the next month, and the rest the month after that. RAJ Inc.'s operating expenses for March through June are $165,000, $185,000, $270,000 and $285,000, respectively, of which salaries and rent, comprising $100,000 are paid immediately, and the rest are paid in the next month. If RAJ had a cash shortfall of $50,000 at the end of April, what is RAJ Inc.'s net cash balance at the end of June?

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Quizplus · Accepted Answer

To calculate RAJ Inc.'s net cash balance at the end of June, we need to consider cash sales, invoice payments, operating expenses, and the initial cash shortfall.March Sales: $190,000April Sales: $200,000May Sales: $323,000June Sales: $340,000Cash Sales (10% of monthly sales):- March: $19,000- April: $20,000- May: $32,300- June: $34,000Invoice Payments (80% next month, 20% the month after):- From March in April: $152,000 (80% of March)- From April in May: $160,000 (80% of April)- From May in June: $258,400 (80% of May)- Remaining 20% from March in May: $38,000- Remaining 20% from April in June: $40,000Operating Expenses:- March: $165,000- April: $185,000- May: $270,000- June: $285,000Salaries and Rent (paid immediately):- March: $100,000- April: $100,000- May: $100,000- June: $100,000Other Expenses (paid next month):- From March in April: $65,000- From April in May: $85,000- From May in June: $170,000Cash Flow Calculation:- End of March: Cash sales of $19,000 - Immediate expenses of $100,000 = -$81,000- End of April: Cash sales of $20,000 + Invoice payments of $152,000 - Immediate expenses of $100,000 - Other expenses of $65,000 + Initial shortfall of -$50,000 = -$43,000 (cumulative)- End of May: Cash sales of $32,300 + Invoice payments of $160,000 + $38,000 - Immediate expenses of $100,000 - Other expenses of $85,000 = $45,300 (cumulative)- End of June: Cash sales of $34,000 + Invoice payments of $258,400 + $40,000 - Immediate expenses of $100,000 - Other expenses of $170,000 = $62,700 (cumulative)Therefore, RAJ Inc.'s net cash balance at the end of June is $62,700 - $43,000 (April's cumulative shortfall) = $18,700.