Chatelain Company Is Preparing Its Budget for the Third Quarter

question 26

Multiple Choice

Chatelain Company is preparing its budget for the third quarter.The cash balance on June 30 was $32,000.Additional budgeted data are provided here: $$\begin{array} { | l | r | r | r | } \hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \\\hline \text { Cash collections } & \$ 53,000 & \$ 51,000 & \$ 53,000 \\\hline \text { Cash payments } & & & \\\hline \text { Purchases of direct materials } & 20,000 & 26,000 & 22,000 \\\hline \text { Operating expenses } & 23,000 & 33,000 & 22,000 \\\hline \text { Capital expenditures } & 14,000 & 8,000 & 15,000 \\\hline\end{array}$$ What amount should be shown in the cash budget for the cash balance at the end of July?

• A)-$25,000
• B)$28,000
• C)-$4,000
• D)$85,000

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Definitions:

Statement of Comprehensive Income

A financial statement that includes all changes in equity from non-owner sources, in addition to net income.

Retained Earnings Restriction

Limitations or requirements placed on the portion of earnings not distributed as dividends but kept by the company for reinvestment.

Share Capital

The total value of a company's shares of stock that have been authorized, issued, and purchased by investors.

Financial Statements

Formal records that outline the financial activities and conditions of a business, entity, or individual, including the balance sheet, income statement, and cash flow statement.