Gamma Corp.has prepared a preliminary cash budget for the 3 rd quarter as shown below: Subsequently,the marketing department revised its figures for cash collections.New data are as follows: $52,000 in July,$50,000 in August,and $42,000 in September.
-Based on the new data,calculate the new projected cash balance at the end of July.

Question

Gamma Corp.has prepared a preliminary cash budget for the 3 rd quarter as shown below:  Subsequently,the marketing department revised its figures for cash collections.New data are as follows: $52,000 in July,$50,000 in August,and $42,000 in September.
-Based on the new data,calculate the new projected cash balance at the end of July.

Quizplus · Accepted Answer

To calculate the new projected cash balance at the end of July, we need to first calculate the total cash collections for July, August, and September.

Total cash collections = $52,000 + $50,000 + $42,000 = $144,000

We can then update the cash budget by replacing the previous cash collections of $50,000 for July with the new figure of $52,000.

Revised cash budget:

July: 
Beginning cash balance: $4,000 
Add: Cash collections: $52,000 
Total cash available: $56,000 
Less: Cash disbursements: $46,000 
Ending cash balance: $10,000

Therefore, the new projected cash balance at the end of July is $10,000. However, this is not one of the answer choices. We need to select the closest answer from the given options. The closest option is C) $7,000.