Mini-Case 13-3: Rent-A-Nerd Computer Consultants

question 114

Multiple Choice

Mini-Case 13-3: Rent-A-Nerd Computer Consultants
The owners of Rent-A-Nerd Computer Consultants have prepared the partial cash budget for the upcoming quarter:
CASH BUDGET - RENT-A-NERD COMPUTER CONSULTANTS
Month 1 Month 2 Month 3
Cash Receipts
Total Sales $42,650 $45,500 $47,000
Credit Sales 25,590 27,300 28,200
Collections
10 percent same month 2,559 2,730 2,820
80 percent next month 19,941 20,472 21,840
8 percent following month 1,864 1,994 2,048
Cash Sales $17,060 $18,200 $18,800
Total Cash Receipts ________ ________ ________
Cash Disbursements
Purchases $32,404 $33,267 $35,490
Wages/Salaries 4,212 4,897 5,126
Rent/Utilities 1,865 1,910 2,250
Other 2,400 3,750 6,105
Total Cash Disbursements ________ ________ ________
End of Month Balance
Beginning Cash $4,750 ________ ________
Cash Receipts ________ ________ ________
Cash Disbursement ________ ________ ________
EOM Balance ________ ________ ________
Borrow ________ ________ ________
Repay ________ ________ ________
Calculate the final end-of-month balance for months 1-3 and answer the following questions.
-How much would Rent-A-Nerd have to borrow if its desired minimum cash balance is $4,000?

• A)$2,224 in Month 3
• B)Nothing. Rent-A-Nerd's end of the month cash balance is below $4,000.
• C)$2,598 in Month 3
• D)$20,771 in Month 3

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Definitions:

Domestic Problems

Issues or conflicts arising within the home or family sphere, which could impact an individual's emotional well-being, productivity, or professional life.

Cafeteria-Style Benefits Plan

An employee benefit plan that allows workers to choose from a variety of pre-tax benefit options, similar to a cafeteria.

Employee Satisfaction

The level of contentment employees feel about their job, which can affect their performance and loyalty to the company.

Company Policies

Formal guidelines and rules adopted by an organization to govern its actions and decisions.