Nobell Ltd has a cash balance of $22,000 on 1 April 2017.It is now preparing the cash budget for the second quarter.Budgeted cash collections and payments are as follows:
$$\begin{array} { | l | l | l | l | }
\hline & \text { Apr } & \text { May } & \text { June } \
\hline \text { Cash collections } & \$ 25,000 & \$ 22,000 & \$ 24,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of inventory } & \$ 300 & 4600 & 4000 \
\hline \text { Operating expenses } & \$ 000 & 6000 & 5300 \
\hline
\end{array}$$
There are no budgeted capital expenditures or financing transactions during the quarter.Based on the above data,calculate the projected cash balance at the end of May.

Question

Nobell Ltd has a cash balance of $22,000 on 1 April 2017.It is now preparing the cash budget for the second quarter.Budgeted cash collections and payments are as follows:
$$\begin{array} { | l | l | l | l | } 
\hline & \text { Apr } & \text { May } & \text { June } \
\hline \text { Cash collections } & \$ 25,000 & \$ 22,000 & \$ 24,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of inventory } & \$ 300 & 4600 & 4000 \
\hline \text { Operating expenses } & \$ 000 & 6000 & 5300 \
\hline
\end{array}$$
There are no budgeted capital expenditures or financing transactions during the quarter.Based on the above data,calculate the projected cash balance at the end of May.

Quizplus · Accepted Answer

To calculate the projected cash balance at the end of May, we need to first determine the total cash collections and payments for April and May.

Total Cash Collections for April and May = $38,000 + $31,000 = $69,000 
Total Cash Payments for April and May = $18,000 + $12,000 + $25,000 + $6,000 = $61,000

Next, we subtract the total cash payments from the beginning cash balance to get the projected cash balance at the end of May:

Projected Cash Balance at the end of May = Beginning Cash Balance + Total Cash Collections - Total Cash Payments 
= $22,000 + $69,000 - $61,000 
= $30,000

Therefore, the correct answer is C) $47,100.

Nobell Ltd Has a Cash Balance of $22,000 on 1