Chatelain Company is preparing its budget for the third quarter.The cash balance on June 30 was $32,000.Additional budgeted data are provided here: $$\begin{array} { | l | r | r | r | }
\hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Cash collections } & \$ 54,000 & \$ 53,000 & \$ 54,000 \
\hline \text { Cash payments } & & & \
\hline \text { Purchases of direct materials } & 22,000 & 24,000 & 21,000 \
\hline \text { Operating expenses } & 21,000 & 19,000 & 27,000 \
\hline \text { Capital expenditures } & 8,000 & 9,000 & 13,000 \
\hline
\end{array}$$ What amount should be shown in the cash budget for the cash balance at the end of July?
A) $19,000
B) $35,000
C) $105,000
D) $86,000

Question

Chatelain Company is preparing its budget for the third quarter.The cash balance on June 30 was $32,000.Additional budgeted data are provided here: $$\begin{array} { | l | r | r | r | } 
\hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Cash collections } & \$ 54,000 & \$ 53,000 & \$ 54,000 \
\hline \text { Cash payments } & & & \
\hline \text { Purchases of direct materials } & 22,000 & 24,000 & 21,000 \
\hline \text { Operating expenses } & 21,000 & 19,000 & 27,000 \
\hline \text { Capital expenditures } & 8,000 & 9,000 & 13,000 \
\hline
\end{array}$$ What amount should be shown in the cash budget for the cash balance at the end of July?
A) $19,000
B) $35,000
C) $105,000
D) $86,000

Quizplus · Accepted Answer

To calculate the cash balance at the end of July, we start with the beginning cash balance and adjust for cash collections and payments during the month. The beginning cash balance is $32,000. Cash collections in July are $54,000. Cash payments in July include purchases of direct materials ($22,000), operating expenses ($21,000), and capital expenditures ($8,000), totaling $51,000. The cash balance at the end of July is calculated as follows: $32,000 (beginning balance) + $54,000 (collections) - $51,000 (payments) = $35,000.

Chatelain Company Is Preparing Its Budget for the Third Quarter