Question

Tadeo Corp. has provided a part of its budget for the second quarter: Apr $40,000 May $45,000 Jun $42,000 Cash collections Cash payments: Purchases of direct materials Operating expenses Capital expenditures 6,000 6,000 20,000 6,000 7,900 0 5,000 4,500 The cash balance on April 1 is $12,000. Assume that there will be no financing transactions or costs during the quarter. Calculate the projected cash balance at the end of May. O A. $51,100 OB. $65,000 OC. $52,000 O D. $13,900

Answer 1

Ans.	Option   A     $51,100
	*Calculations:
	TADEO   CORP.
	Cash Budget
	April, May and June
		April	May	June
	Cash balance, beginning	$12,000	$20,000	$51,100
	Cash collections	$40,000	$45,000	$42,000
	Cash available   (a)	$52,000	$65,000	$93,100
	Cash payments:
	Purchase of direct materials	$6,000	$6,000	$5,000
	Operating expenses	$6,000	$7,900	$4,500
	Capital expenditures	$20,000	$0	$0
	Total cash payment (b)	$32,000	$13,900	$9,500
	Cash balance, ending   (a - b)	$20,000	$51,100	$83,600
	*Ending balance of current month will be beginning cash balance for next month. So, April and May month's
	ending balances will be beginning for May and June respectively.