Homework SourseWalMart Corporation had the following budgeted transactions
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 | ||
Solution
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 |
