Fulkron,Inc.provides the following data taken from its third quarter budget: $$\begin{array} { | l | r | r | r | }
\hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Cash collections } & \$ 66,000 & \$ 45,000 & \$ 41,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 32,000 & 35,000 & 30,000 \
\hline \text { Operating expenses } & 11,000 & 17,000 & 20,000 \
\hline \text { Capital expenditures } & 0 & 35,000 & 8,000 \
\hline
\end{array}$$ The cash balance on June 30 is projected to be $14,000.Based on the above data,calculate the shortfall the company is projected to have at the end of August.
A) $35,000
B) $22,000
C) $5,000
D) $37,000

Question

Fulkron,Inc.provides the following data taken from its third quarter budget: $$\begin{array} { | l | r | r | r | } 
\hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Cash collections } & \$ 66,000 & \$ 45,000 & \$ 41,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 32,000 & 35,000 & 30,000 \
\hline \text { Operating expenses } & 11,000 & 17,000 & 20,000 \
\hline \text { Capital expenditures } & 0 & 35,000 & 8,000 \
\hline
\end{array}$$ The cash balance on June 30 is projected to be $14,000.Based on the above data,calculate the shortfall the company is projected to have at the end of August.
A) $35,000
B) $22,000
C) $5,000
D) $37,000

Quizplus · Accepted Answer

The projected shortfall at the end of August is calculated as follows:- Starting cash balance in July: $14,000- Cash collections in July: $66,000- Cash payments in July (sum of purchases of direct materials, operating expenses, and capital expenditures): $32,000 + $11,000 + $0 = $43,000- Net cash flow in July: $66,000 - $43,000 = $23,000- Ending cash balance in July (starting balance + net cash flow): $14,000 + $23,000 = $37,000- Cash collections in August: $45,000- Cash payments in August (sum of purchases of direct materials, operating expenses, and capital expenditures): $35,000 + $17,000 + $35,000 = $87,000- Net cash flow in August: $45,000 - $87,000 = -$42,000- Ending cash balance in August (starting balance + net cash flow): $37,000 - $42,000 = -$5,000Therefore, the projected shortfall at the end of August is $5,000.

Fulkron,Inc The Cash Balance on June 30 Is Projected to Be