Tadeo Corp. has provided a part of its budget for the second quarter: $$\begin{array} { | l | r | r | r | }
\hline & { \text { Apr } } &{ \text { May } } & { \text { Jun } } \
\hline \text { Cash collections } & \$ 40,000 & \$ 45,000 & \$ 42,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 7200 & 4500 & 4500 \
\hline \text { Operating expenses } & 7000 & 7000 & 7000 \
\hline \text { Capital expenditures } & 20,000 & 4000 & 20,000 \
\hline
\end{array}$$ The cash balance on April 1 is $12,000. Assume that there will be no financing transactions or costs during the quarter. Calculate the projected cash balance at the end of May.

Question

Tadeo Corp. has provided a part of its budget for the second quarter: $$\begin{array} { | l | r | r | r | } 
\hline & { \text { Apr } } &{ \text { May } } &  { \text { Jun } } \
\hline \text { Cash collections } & \$ 40,000 & \$ 45,000 & \$ 42,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 7200 & 4500 & 4500 \
\hline \text { Operating expenses } & 7000 & 7000 & 7000 \
\hline \text { Capital expenditures } & 20,000 & 4000 & 20,000 \
\hline
\end{array}$$ The cash balance on April 1 is $12,000. Assume that there will be no financing transactions or costs during the quarter. Calculate the projected cash balance at the end of May.

Quizplus · Accepted Answer

The projected cash balance at the end of May is $47,300. This is calculated by adding the cash collections for April and May ($40,000 + $45,000 = $85,000) and subtracting the cash payments for April and May ($7,200 + $4,500 + $7,000 + $7,000 = $25,700). The resulting amount is then added to the cash balance on April 1 ($12,000) to arrive at the projected cash balance at the end of May ($47,300).

Tadeo Corp The Cash Balance on April 1 Is $12,000