Nyree Company Is Preparing Its Budget for the Third Quarter

question 120

Multiple Choice

Nyree Company is preparing its budget for the third quarter. The cash balance on June 30 was $32,000. Additional budgeted data are provided here: $$\begin{array} { | l | r | r | r | } \hline & { \text { July } } & { \text { Aug } } & { \text { Sep } } \\\hline \text { Cash collections } & \$ 53,000 & \$ 51,000 & \$ 56,000 \\\hline \text { Cash payments } & & & \\\hline \text { Purchases of direct materials } & 20,000 & 20,000 & 20,000 \\\hline \text { Operating expenses } & 32,000 & 20,000 & 23,000 \\\hline \text { Capital expenditures } & 16,000 & 7000 & 9000 \\\hline\end{array}$$ What amount should be shown in the cash budget for the cash balance at the end of July?

• A) $36,000
• B) $17,000
• C) $121,000
• D) $85,000

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Definitions:

Forward Contract

A financial contract between two parties to buy or sell an asset at a specified future time at a price agreed upon at the contract's inception.

Settlement Date

The date on which a trade (purchase or sale of securities) is finalized, and the buyer must make payment while the seller delivers the securities.

Zero Sum Game

A situation in finance or economics where each participant's gain or loss is exactly balanced by the losses or gains of the other participants.

American Call Option

An option contract that gives the holder the right, but not the obligation, to buy an underlying asset at a specified price within a set period, anytime until the contract's expiration.