Question

Southland Company is preparing a cash budget for August. The company has $16,000 cash at the beginning of August and anticipates $124,800 in cash receipts and $133,500 in cash disbursements during August. Southland Company wants to maintain a minimum cash balance of $10,000. The preliminary cash balance at the end of August before any loan activity is: Multiple Choice 1:05 $17,300. $140,800 ($8.700). $7,300

Answer 1

Ending cash balance = Beginning cash balance + Cash receivable – Cash disbursements

                                     = $ 16,000 + $ 124,800 - $ 133,500

                                     = $ 140,800 - $ 133,500

                                     = $ 7,300

The preliminary cash balance at the end of August before any loan activity is $ 7,300

Hence option 4^th “$7,300” is correct answer.