The Police Department of a Given City Received an Appropriation

question 120

Multiple Choice

The Police Department of a given city received an appropriation in the amount of $9,000,000 for the fiscal year ended June 30, 2017. During the month ended July 31, 2017, the following transactions occurred: a) purchase orders were issued in the amount of $800,000; b) purchase orders, related to a) above, were filled in the amount of $790,000; the related invoice amount was $795,000; invoices were paid in the amount of $750,000; c) salaries were accrued and paid in the amount of $775,000. The balance available for the police department as of July 31, 2017 is:

• A) $7,420,000.
• B) $7,430,000.
• C) $7,460,000.
• D) $7,425,000.

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Definitions:

Bankruptcy

is a legal process through which individuals or businesses unable to meet their financial obligations can seek relief from some or all of their debts.

Weighted Average Cost of Capital

A calculation of a firm's cost of capital, wherein each category of capital is proportionally weighted.

Interest Tax Shield

A deduction that companies can take from their taxable income for the interest payments they have made on their debt, effectively reducing their taxable income.

Bankruptcy Cost

The expenses and financial losses associated with going through bankruptcy, including legal fees, lost business, and detrimental effects on creditworthiness.