Jensen Company is preparing a cash budget for the month of June.The following information is available:
$\begin{array}{ll}
\text { Cash Balance, May 31, } 2015 & \$ 10,000 \
\text { Cash collections from customers in June } & 76,000 \
\text { Cash paid for merchandise in June } & 42,000 \
\text { Paid operating expenses in June } & 17,000 \
\text { Purchase furniture for cash in June } & 5,000 \
\text { Depreciation expense in June } & 2,000 \
\text { Amortization expense in June } & 3,000
\end{array}$
The minimum cash balance desired is $10,000.What are the net cash receipts and disbursements for the month of June?
A) $7,000
B) $10,000
C) $12,000
D) $17,000

Question

Quizplus · Accepted Answer

Net cash receipts for June are calculated as the sum of the beginning cash balance and cash collections from customers, which equals $10,000 + $76,000 = $86,000. Net cash disbursements for June include cash paid for merchandise, paid operating expenses, and purchase of furniture, totaling $42,000 + $17,000 + $5,000 = $64,000. Depreciation and amortization expenses are non-cash expenses and therefore not considered in cash disbursements. The net cash receipts minus net cash disbursements equals $86,000 - $64,000 = $22,000. However, the question asks for the net cash receipts and disbursements separately, not the net increase or decrease in cash. Therefore, the correct answer is not directly provided in the calculation above but involves understanding that the question's phrasing was misinterpreted.

Jensen Company Is Preparing a Cash Budget for the Month