Fulkron Inc.provides the following data taken from its third quarter budget: The cash balance on June 30 is projected to be $10,000.
-Based on the above data,calculate the shortfall the company is projected to have at the end of August.

Question

Fulkron Inc.provides the following data taken from its third quarter budget:  The cash balance on June 30 is projected to be $10,000.
-Based on the above data,calculate the shortfall the company is projected to have at the end of August.

Quizplus · Accepted Answer

To calculate the projected cash balance at the end of August, we need to add up the cash inflows and subtract the cash outflows from July, August, and September.

Cash inflows in July: $4,000
Cash inflows in August: $20,000
Cash inflows in September: $30,000

Total cash inflows: $4,000 + $20,000 + $30,000 = $54,000

Cash outflows in July: $11,000
Cash outflows in August: $29,000
Cash outflows in September: $27,000

Total cash outflows: $11,000 + $29,000 + $27,000 = $67,000

Projected cash balance at the end of August: 
$10,000 (starting cash balance June 30) + $4,000 (cash inflows in July) + $20,000 (cash inflows in August) - $11,000 (cash outflows in July) - $29,000 (cash outflows in August) = $-6,000

This means that the company is projected to have a shortfall of $37,000 at the end of August (because the cash balance is negative). Therefore, the best answer is C.