Diemans Corp.has provided a part of its budget for the second quarter: $$\begin{array} { | l | r | r | r | }
\hline& \text { Apr } & \text { May } & \text { Jun } \
\hline \text { Cash collections } & \$ 40,000 & \$ 40,000 & \$ 43,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 7,000 & 7,000 & 4,500 \
\hline \text { Operating expenses } & 6,000 & 9,000 & 7,000 \
\hline \text { Capital expenditures } & 20,000 & 4,000 & 4,600 \
\hline
\end{array}$$
The cash balance on April 1 is $14,000.Assume that there will be no financing transactions or costs during the quarter.Calculate the projected cash balance at the end of April.
A) $67,900
B) $54,000
C) $21,000
D) $41,000

Question

Diemans Corp.has provided a part of its budget for the second quarter: $$\begin{array} { | l | r | r | r | } 
\hline& \text { Apr } & \text { May } & \text { Jun } \
\hline \text { Cash collections } & \$ 40,000 & \$ 40,000 & \$ 43,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 7,000 & 7,000 & 4,500 \
\hline \text { Operating expenses } & 6,000 & 9,000 & 7,000 \
\hline \text { Capital expenditures } & 20,000 & 4,000 & 4,600 \
\hline
\end{array}$$
 The cash balance on April 1 is $14,000.Assume that there will be no financing transactions or costs during the quarter.Calculate the projected cash balance at the end of April.
A) $67,900
B) $54,000
C) $21,000
D) $41,000

Quizplus · Accepted Answer

The projected cash balance at the end of April is calculated by adding the beginning cash balance to the cash collections for April, and then subtracting the total cash payments for April. Beginning cash balance = $14,000; Cash collections in April = $40,000; Total cash payments in April = Purchases of direct materials ($7,000) + Operating expenses ($6,000) + Capital expenditures ($20,000) = $33,000. Therefore, the projected cash balance at the end of April = $14,000 + $40,000 - $33,000 = $21,000.

Diemans Corp The Cash Balance on April 1 Is $14,000