Lyon Corp. has provided a part of its budget for the second quarter: $$\begin{array} { | l | r | r | r | }
\hline & { \text { Apr } } & { \text { May } } & { \text { Jun } } \
\hline \text { Cash collections } & \$ 40,000 & \$ 43,000 & \$ 50,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 7200 & 7200 & 6000 \
\hline \text { Operating expenses } & 7000 & 9000 & 7000 \
\hline \text { Capital expenditures } & 5000 & 0 & 0 \
\hline
\end{array}$$ 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 June.

Question

Lyon Corp. has provided a part of its budget for the second quarter: $$\begin{array} { | l | r | r | r | } 
\hline &  { \text { Apr } } & { \text { May } } & { \text { Jun } } \
\hline \text { Cash collections } & \$ 40,000 & \$ 43,000 & \$ 50,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 7200 & 7200 & 6000 \
\hline \text { Operating expenses } & 7000 & 9000 & 7000 \
\hline \text { Capital expenditures } & 5000 & 0 & 0 \
\hline
\end{array}$$ 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 June.

Quizplus · Accepted Answer

We need to add up the budgets provided for the second quarter to the cash balance on April 1 to get the projected cash balance at the end of June.

Budget for the second quarter: 
- Sales revenue: $450,000 
- Other revenue: $16,550 
- Cost of goods sold: $200,000 
- Operating expenses: $56,400 
- Capital expenditures: $120,000

Total: $843,950

Adding the cash balance on April 1: 
$843,950 + $12,000 = $855,950

Therefore, the projected cash balance at the end of June is $96,600 (answer choice C).

Lyon Corp Has Provided a Part of Its Budget for the the Second