Wininger Company is preparing a cash budget for the month of June.The following information is available:
$\begin{array}{ll}
\text { Cash Balance, May 31, } 2015 & \$ 20,000 \
\text { Cash collections from customers in June } & 46,000 \
\text { Cash paid for merchandise in June } & 42,000 \
\text { Paid operating expenses in June } & 12,000 \
\text { Purchase furniture for cash in June } & 3,000 \
\text { Depreciation expense in June } & 2,000 \
\text { Amortization expense in June } & 4,000
\end{array}$
The minimum cash balance desired is $10,000.What is the deficiency of cash before financing at June 30,2015?
A) $(1,000)
B) $(3,000)
C) $(7,000)
D) $(11,000)

Question

Quizplus · Accepted Answer

To calculate the deficiency of cash before financing at June 30, 2015, we need to consider all cash inflows and outflows, excluding non-cash expenses (depreciation and amortization). Starting with a cash balance of $20,000, adding cash collections of $46,000, and then subtracting cash paid for merchandise ($42,000), paid operating expenses ($12,000), and the purchase of furniture ($3,000), we get: $20,000 + $46,000 - $42,000 - $12,000 - $3,000 = $9,000. The desired minimum cash balance is $10,000, so the deficiency is $10,000 - $9,000 = $1,000.

Wininger Company Is Preparing a Cash Budget for the Month