Tortilla Corp.has provided a part of its budget for the second quarter: $$\begin{array} { | l | r | r | r | }
\hline & \text { Apr } & \text { May } & \text { Jun } \
\hline \text { Cash collections } & \$ 40,000 & \$ 40,000 & \$ 42,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 7,200 & 7,000 & 4,500 \
\hline \text { Operating expenses } & 7,000 & 7,000 & \
\hline \text { Capital expenditures } & 10,000 & 4,000 & 20,000 \
\hline
\end{array}$$ 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 May.
A) $51,800
B) $69,800
C) $54,000
D) $18,000

Question

Tortilla Corp.has provided a part of its budget for the second quarter: $$\begin{array} { | l | r | r | r | } 
\hline & \text { Apr } & \text { May } & \text { Jun } \
\hline \text { Cash collections } & \$ 40,000 & \$ 40,000 & \$ 42,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 7,200 & 7,000 & 4,500 \
\hline \text { Operating expenses } & 7,000 & 7,000 & \
\hline \text { Capital expenditures } & 10,000 & 4,000 & 20,000 \
\hline
\end{array}$$ 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 May.
A) $51,800
B) $69,800
C) $54,000
D) $18,000

Quizplus · Accepted Answer

The cash balance at the end of May is calculated by adding the cash collections for April and May to the initial cash balance, then subtracting the cash payments for purchases, operating expenses, and capital expenditures for the same months: $14,000 + $40,000 + $40,000 - $7,200 - $7,000 - $10,000 - $7,000 - $4,000 = $51,800.

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