Diemans Ltd has provided a part of its budget for the second quarter:
$$\begin{array} { | l | l | l | l | }
\hline & \text { Apr } & \text { May } & \text { Jun } \
\hline \text { Cash collections } & \$ 40,000 & \$ 42,000 & \$ 40,000 \
\hline \text { Cash payments } & & & \
\hline \text { Purchases of inventory } & 5000 & 7200 & 7000 \
\hline \text { Operating expenses } &6000 & 7000 &6 000 \
\hline \text { Capital expenditures } & 4000 & 4600 & 4000 \
\hline
\end{array}$$
The cash balance on 1 April is $14,000.Assume that there will be no financing transactions or costs during the quarter.Calculate the cash balance at the end of April.

Question

Diemans Ltd has provided a part of its budget for the second quarter:
$$\begin{array} { | l | l | l | l | } 
\hline & \text { Apr } & \text { May } & \text { Jun } \
\hline \text { Cash collections } & \$ 40,000 & \$ 42,000 & \$ 40,000 \
\hline \text { Cash payments } & & & \
\hline \text { Purchases of inventory } & 5000 & 7200 & 7000 \
\hline \text { Operating expenses } &6000 & 7000 &6 000 \
\hline \text { Capital expenditures } & 4000 & 4600 & 4000 \
\hline
\end{array}$$
The cash balance on 1 April is $14,000.Assume that there will be no financing transactions or costs during the quarter.Calculate the cash balance at the end of April.

Quizplus · Accepted Answer

The cash balance at the end of April is calculated as the beginning cash balance plus cash collections minus cash payments. Starting with $14,000, add $40,000 in collections, and subtract $5,000 (inventory), $6,000 (operating expenses), and $4,000 (capital expenditures), resulting in $39,000.

Diemans Ltd Has Provided a Part of Its Budget for the Second