Berkeley Products has a cash balance of $20,000 at April 1, 2011. They are now preparing the cash budget for the second quarter. Budgeted cash collections and payments are as follows:
$\begin{array}{|l|r|r|r|}
\hline&{\text { Apr }} &{\text { May }} &{\text { Jun }} \
\hline \text { Cash collections } & \$ 12,000 & \$ 9,000 & \$ 10,500 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of inventory } & 4,600 & 4,200 & 4,000 \
\hline \text { Operating expenses } & 5,000 & 5,200 &4,800 \
\hline
\end{array}$
There are no budgeted capital expenditures or financing transactions during the quarter.
- Based on the above data, what is the projected cash balance at the end of June?

Question

Berkeley Products has a cash balance of $20,000 at April 1, 2011. They are now preparing the cash budget for the second quarter. Budgeted cash collections and payments are as follows:
$\begin{array}{|l|r|r|r|} 
\hline&{\text { Apr }} &{\text { May }} &{\text { Jun }} \
\hline \text { Cash collections } & \$ 12,000 & \$ 9,000 & \$ 10,500 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of inventory } & 4,600 & 4,200 &  4,000 \
\hline \text { Operating expenses } & 5,000 & 5,200 &4,800 \
\hline
\end{array}$
There are no budgeted capital expenditures or financing transactions during the quarter.
- Based on the above data, what is the projected cash balance at the end of June?

Quizplus · Accepted Answer

The cash balance at the end of June is calculated by adding the initial cash balance and cash collections, then subtracting cash payments for each month. Starting with $20,000, add collections ($12,000 + $9,000 + $10,500) and subtract payments for inventory and expenses ($4,600 + $5,000 + $4,200 + $5,200 + $4,000 + $4,800), resulting in a balance of $23,700.

Berkeley Products Has a Cash Balance of $20,000 at April