A3+ Has Prepared Its 3rd Quarter Budget and Provided the Following

question 93

Multiple Choice

A3+ has prepared its 3rd quarter budget and provided the following data: $$\begin{array} { | l | r | r | r | } \hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \\\hline \text { Cash collections } & \$ 50,000 & \$ 40,000 & \$ 48,000 \\\hline \text { Cash payments: } & & & \\\hline \text { Purchases of inventory } & 31,000 & 22,000 & 18,000 \\\hline \text { Operating expenses } & 12,000 & 9,000 & 11,600 \\\hline \text { Capital expenditures } & 13,000 & 25,000 & 0 \\\hline\end{array}$$
-Refer to the table above,The cash balance on June 30 is projected to be $4,000. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the ending cash balance before financing for August.

• A) $9,000
• B) $5,000
• C) $3,000
• D) ($8,000)

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Definitions:

Dissociation

The process of a member withdrawing from a partnership or a member's interest being terminated, affecting the relationship between the members of a business entity.

Manager-Managed LLC

A limited liability company where the daily operations are overseen by appointed managers rather than all members.

LLC Members

Individuals or entities that own an interest in a limited liability company and have rights and responsibilities outlined in the LLC's operating agreement.

Limited Liability Company

A corporate framework that merges the direct tax benefits of partnerships or sole proprietorships with the protective limited liability features of a corporation.