Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

1. Memphis Corporation has a cash balance of $200,000.00 on1/1/2008. The company

ID: 2457626 • Letter: 1

Question

1. Memphis Corporation has a cash balance of $200,000.00 on1/1/2008. The company’s sales budget for the year was$500,000.00. However, only 80% of the sales for the year arecollectible during the year. The company’s expected cash outflow for the year was expected to be $800,000.00. What is theexpected final cash balance? Is it a cash surplus or deficit?

2. Gates and Company has a cash balance of $150,000.00 on1/1/08. The company’s total expected cash inflow for the yearwas $500,000.00 and its expected cash outflow was $700,000.00. Whatis the expected final cash balance? Is it a cash surplus ordeficit?

3. The 2006 budget for Gates and Company includes $100,000.00for stationery expense. The company bought and paid for $50,000.00worth of stationery, and it made a commitment with Office Max tobuy additional $25,000.00 worth of stationery. What is the balancenow in the stationery budget?

Explanation / Answer

1. Memphis corporation cash Budget Beginning Cash balance 1/1/08              200,000 Add Receipts from sales (80% of 500,000)     400,000 Total cashavailable                                600,000 Less Disbursements Expected cashoutflow                          (800,000) Expected final cashbalance                   (200,000) Expected final cash balance is -200,000 which is a cashdeficit. 2. Gates and Company cash budget Beginning Balance1/1/08                      150,000 Add Cashinflows                                         500,000 Total cashavailable                               650,000 Less Disbursements                                     (700,000) Expected final cashbalance                   (50,000) Ending balance is a cash deficit of 50,000. 3.Stationary expense budget for the year    100,000 Less stationary bought andpaid                          (50,000)                                                                  50,000 less commitment with officemax                       (25,000) Available balance in the stationary account                                                      25,000