12 Lornish Company is preparing a cash budget for the month

12) Lornish Company is preparing a cash budget for the month of June. The following information is available Cash Balance, May 31, 2015 $11,000 43,000 10,000 20,000 20,000 20,000 5,000 Cash collections from customers in June Depreciation expense in June Cash paid for equipment in June Cash paid for merchandise in June Cash paid for operating expenses in June Cash dividend paid in June The minimum cash balance desired is $5,000. What are the net cash receipts and disbursements for the month of June? A) $(2,000) B) $(3,000) C) $(22,000) D) $(32,000) Answer: C Diff: 3 LO: 7-8 AACSB: Analytic skills Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget 52 Copyright © 2014 Pearson Education, Inc.

Solution

Cash Opening Balance $             11,000.00 Add : Cash Collections $             43,000.00 Total $             54,000.00 Less : Desired Minimum Balance $               5,000.00 Net Cash Available $             49,000.00 Less : Cash Paid for Equipments $             20,000.00 Cash Paid for Merchandise $             20,000.00 Cash Paid for Operating Expenses $             20,000.00 Cash Dividend Paid $               5,000.00 Total Cash Disbursements $             65,000.00 Net Cash Receipts / Disbursements for the month $           -16,000.00