Snow Mountain Resort had a beginning cash balance of $9,720 for the quarter.During the quarter,the firm had cash collections of $157,311,wages and other cash expenses of $67,900,payments on account of $57,412,and dividends paid of $2,500.The minimum cash balance was just set at $1,200.The beginning short-term debt is $28,000 with a quarterly interest rate of 1.4 percent.At quarter end,the cumulative surplus (deficit)is ________ and the ending short-term debt is ________.

Question

Quizplus · Accepted Answer

Beginning cash balance = $9,720
Cash collections = $157,311
Wages and other cash expenses = $67,900
Payments on account = $57,412
Dividends paid = $2,500

Net cash inflow = $157,311 - $67,900 = $89,411
Net cash outflow = $57,412 + $2,500 = $59,912

At quarter-end, the minimum cash balance required is $1,200.

Therefore, the cumulative surplus (deficit) at quarter-end is:

Beginning cash balance + Net cash inflow - Net cash outflow - Minimum cash balance required
= $9,720 + $89,411 - $59,912 - $1,200
= $37,019

The ending short-term debt is calculated as follows:

Beginning short-term debt + (Beginning short-term debt x Quarterly interest rate) - Short-term debt payments 
= $28,000 + ($28,000 x 0.014) - $0 
= $28,392

Therefore, the answer is E) $9,627; $0.

Snow Mountain Resort Had a Beginning Cash Balance of $9,720