Hilliard Company Budgeted the Following Transactions for April 2014 The Beginning Cash Balance Was $50,000

question 7

Multiple Choice

Hilliard Company budgeted the following transactions for April 2014: $$\begin{array} { |l | r | } \hline \text { Sales (75\% collected in month of sale) } & \$ 200,000 \\\hline \text { Cash Operating Expenses } & 105,000 \\\hline \text { Cash Purchases of Investments } & 75,000 \\\hline \text { Cash Payment of Debt } & 15,000 \\\hline \text { Depreciation on Operating Assets } & 12,000 \\\hline\end{array}$$ The beginning cash balance was $50,000. The company desires to have a $25,000 ending cash balance. What is the amount of the cash surplus or shortage?

• A) $40,000 surplus
• B) $40,000 shortage
• C) $20,000 shortage
• D) There is no surplus or shortage.

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Definitions:

Current Ratio

A metric used to evaluate a corporation's capability to meet obligations that are short-term or due within a year.

Short-Term Investments

Investments that are readily marketable and intended to be converted into cash within the next year or operating cycle, whichever is longer.

Total Current Liabilities

Total current liabilities are the sum of all debts and financial obligations a company owes within the next year.

Discontinued Operations

A segment of a company's business that has been sold or ceased to operate, and its financial results are separately reported from continuing operations.