A3+ Has Prepared Its Third Quarter Budget and Provided the Following

question 54

Multiple Choice

A3+ has prepared its third quarter budget and provided the following data:
$$\begin{array} { | l | l | l | l | } \hline &{ \text { Jul } } & { \text { Aug } } & { \text { Sep } } \\\hline \text { Cash collections } & \$ 49,000 & \$ 39,500 & \$ 46,800 \\\hline \text { Cash payments } & & & \\\hline \text { Purchases of inventory } & 28,000 & 21,500 & 17,000 \\\hline \text { Operating expenses } & 12,400 & 9100 & 11,200 \\\hline \text { Capital expenditures } & 13,500 & 24,700 &0 \\\hline\end{array}$$
The cash balance on 30 June is projected to be $4200.The company has to maintain a minimum cash balance of $5,000 and is authorised 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 5%.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.Calculate the final cash balance at the end of August taking into consideration all the financing transactions.

• A) $48,800
• B) $15,000
• C) -$6500
• D) $8458

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Definitions:

Annual Revenue

The total income generated by a business over a one-year period from its normal business operations.

Revenue

The total amount of money received by a company for goods sold or services provided during a certain period of time.

Non-food Items

Refers to products not intended for human consumption, such as clothing, electronics, and household goods.

Warehouse Store

A retail store, typically of large size, offering a wide variety of goods stored in bulk and sold at lower prices, usually requiring membership for shopping.