Network Company Pty Ltd made the following estimates for the three months ending 31 March.This is Network Company's first period of operation and their starting cash balance is $5 000.
Estimates:
$ \begin{array}{lr}\text { Cash receipts from sales } & \$ 600000 \ \text { Cash payments for expenses } & 260000 \ \text { Purchase of fixed assets (\$10 000 will not be paid until April) } & 40000 \ \text { Depreciation of fixed assets } & 8000 \ \text { Repayment of bank loan } & 50000\end{array} $
What is the estimated cash balance at 31 March?

Question

Quizplus · Accepted Answer

The estimated cash balance at 31 March can be calculated as follows:Starting cash balance: $5,000+ Cash receipts from sales: $600,000- Cash payments for expenses: -$260,000- Purchase of fixed assets (only $30,000 paid in March since $10,000 is deferred to April): -$30,000- Depreciation of fixed assets (non-cash expense, so it's not deducted): $0- Repayment of bank loan: -$50,000= Estimated cash balance at 31 March: $265,000

Network Company Pty Ltd Made the Following Estimates for the Three