Gamma Corp. has prepared a preliminary cash budget for the third quarter as show

Question

Gamma Corp. has prepared a preliminary cash budget for the third quarter as shown below: Cash Budget Jul Aug Sep Beginning cash balance $32,000 $4,400 $6,900 Plus: Cash collections $49,400 $51,000 47,800 Cash available 81,400 $55,400 $54,700 Less: Cash payments: Purchases of direct materials 36,000 9,000 10,000 Operating expenses 40,000 30,500 30,700 Capital expenditures 1,000 9,000 7,000 Ending cash balance $4,400 $6,900 $7,000 Subsequently, the marketing department revised its figures for cash collections. New data are as follows: $52,000 in July, $55,000 in August, and $42,000 in September. Based on the new data, calculate the new projected cash balance at the end of July.

A. $4,400

B.

$7,800

C.

$13,500

D.

$7,000

Explanation / Answer

Cash Balance at the end of July Beginning 32000 Cash Collections 52000 Cash Payments -36000 Operating Expenses -40000 Capital Expenditure -1000 Ending Cash Balance 7000 The correct option is D. $ 7000

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