Answered: Select one: a. $133,800 b. None of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Valley Trails is preparing the Cash Budget for the upcoming period, and is concerned about their ability to meet their financial obligations in the short term. Following is information relating to Valley’s financial performance:

Beginning-of-period balances:

Accounts Receivable: $81,000

Accounts Payable: $40,500

Accumulated Factory Depreciation: $432,000

Cash: $20,250

Estimates for end-of-period balances:

Accounts Receivable: $101,250

Accounts Payable: $27,000

Accumulated Factory Depreciation: $444,000

Budgeted activity levels for the period:

Sales: $375,000

Purchases of Direct Materials: $67,200

Direct Labor Wages: $112,500

Manufacturing Overhead: $37,500

Selling and Administrative Expenses: $63,000

Except for purchases of direct materials, all expenses are paid as incurred.

What is the budgeted ending cash balance for the period?

Select one:

a. $133,800

b. None of these options are correct.

c. $93,300

d. $105,300

e. $115,050

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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