Berman Company Is Preparing Its Budget for the Third Quarter

question 68

Multiple Choice

Berman Company is preparing its budget for the third quarter.Cash balance on July 31 was $34,000.Assume there is no minimum balance of cash required and no borrowing is undertaken.Additional budgeted data are provided here: $$\begin{array} { | l | r | r | r | } \hline &{ \text { July } } &{ \text { Aug } } & { \text { Sep } } \\\hline \text { Cash collections } & \$ 50,000 & \$ 54,000 & \$ 54,000 \\\hline \text { Cash payments } & & & \\\hline \text { Purchases of direct materials } & 24,000 & 22,000 & 18,000 \\\hline \text { Operating expenses } & 33,000 & 21,000 & 34,000 \\\hline \text { Capital expenditures } & 10,000 & 7000 & 16,000 \\\hline\end{array}$$ Calculate the projected balance of cash at the end of August.

• A) $16,000
• B) $104,000
• C) $45,000
• D) $38,000

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Definitions:

Future Value

The eventual worth of an asset or cash that matches the value of a predetermined present sum.

Compounding

The process where the value of an investment increases because the earnings on an investment, both capital and interest, earn interest as time passes.

Rate of Return

The uplift or shortfall in the value of an investment during a specific interval, portrayed as a percentage of the investment’s original pricing.

Account Value

The total worth of a financial account, considering all assets and liabilities within the account.