Delbert, Inc The Cash Balance on June 30 Is Projected to Be

question 72

Multiple Choice

Delbert, Inc. has prepared its third quarter budget and provided the following data: $$\begin{array} { | l | r | r | r | } \hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \\\hline \text { Cash collections } & \$ 50,000 & \$ 39,700 & \$ 47,300 \\\hline \text { Cash payments: } & & & \\\hline \text { Purchases of direct materials } & 30,000 & 21,500 & 17,800 \\\hline \text { Operating expenses } & 12,400 & 8800 & 11,500 \\\hline \text { Capital expenditures } & 13,400 & 24,500 & 0 \\\hline\end{array}$$ The cash balance on June 30 is projected to be $4600. 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 4%. 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. How much will the company have to borrow at the end of July?

• A) $0
• B) $5,000
• C) $15,000
• D) $10,000

---

Definitions:

Quantitative

Refers to a research method that focuses on obtaining data through empirical observations and statistical, mathematical, or numerical analysis.

Salespeople

Salespeople are individuals who promote and sell products or services to customers, often as representatives of a company.

Buyers

Individuals or organizations that purchase goods or services for personal use, resale, or production purposes.

Reservations

The act of booking in advance to secure a service or product, commonly used in contexts such as hospitality, travel, and dining.