Chaterlain Company Is Preparing Its Budget for the 3^rd Quarter

question 50

Multiple Choice

Chaterlain Company is preparing its budget for the 3^rd quarter. The cash balance on June 30 was $30,000. Additional budgeted data is provided here: $$\begin{array} { | l | r | r | r | } \hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \\\hline \text { Cash collections } & \$ 50,000 & \$ 51,000 & \$ 52,000 \\\hline \text { Cash payments: } & & & \\\hline \text { Purchases of inventory } & 20,000 & 19,000 & 18,000 \\\hline \text { Operating expenses } & 25,000 & 21,000 & 32,000 \\\hline \text { Capital expenditures } & 5,000 & 9,000 & 16,000 \\\hline\end{array}$$ What amount should be shown in the cash budget for the cash balance at the end of July?

• A) $19,100
• B) $30,000
• C) $29,050
• D) $42,200

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Definitions:

Treasury Stock

Shares of a company's own stock held by the company itself, often bought back from shareholders and not considered when calculating earnings per share or dividends.

Retained Earnings

The portion of a company's profits that is not distributed to shareholders as dividends but is kept by the company for reinvestment.

Net Income

The final financial gain of a business once taxes and all expenses are subtracted from the overall income.

Cash Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.