Wal-Mart Corporation had the following budgeted transactions for April Year 2: T

Question

Wal-Mart Corporation had the following budgeted transactions for April Year 2:

The beginning cash balance was $50,000. The company desires to have a $25,000 ending cash balance. The surplus (or shortage) of cash before considering any financing activities (that is, borrowings or repayments) during in April would be:

A. $20,000 surplus.

B. $40,000 surplus.

C. There is no cash surplus or shortage.

D. $40,000 shortage.

Sales (75% collected in month of sale) $ 200,000 Cash operating expenses 105,000 Cash purchase of investment 75,000 Cash payment of debt 15,000 Depreciation on operating assets 12,000

Explanation / Answer

Correct answer is A 20000 surplus

Cash budget April Beginning cash balance 50000 Cash receipt 150000 (200000*75%) Total 200000 Payments Cash operating expense 105000 Cash purchase of investment 75000 Total payments 180000 Surplus /(shortage) 20000

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