Chatelain Company is preparing its budget for the third quarter.The cash balance on June 30 was $32,000.Additional budgeted data are provided here: $$\begin{array} { | l | r | r | r | }
\hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Cash collections } & \$ 53,000 & \$ 51,000 & \$ 53,000 \
\hline \text { Cash payments } & & & \
\hline \text { Purchases of direct materials } & 20,000 & 26,000 & 22,000 \
\hline \text { Operating expenses } & 23,000 & 33,000 & 22,000 \
\hline \text { Capital expenditures } & 14,000 & 8,000 & 15,000 \
\hline
\end{array}$$ What amount should be shown in the cash budget for the cash balance at the end of July?
A)-$25,000
B)$28,000
C)-$4,000
D)$85,000

Question

Chatelain Company is preparing its budget for the third quarter.The cash balance on June 30 was $32,000.Additional budgeted data are provided here: $$\begin{array} { | l | r | r | r | } 
\hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Cash collections } & \$ 53,000 & \$ 51,000 & \$ 53,000 \
\hline \text { Cash payments } & & & \
\hline \text { Purchases of direct materials } & 20,000 & 26,000 & 22,000 \
\hline \text { Operating expenses } & 23,000 & 33,000 & 22,000 \
\hline \text { Capital expenditures } & 14,000 & 8,000 & 15,000 \
\hline
\end{array}$$ What amount should be shown in the cash budget for the cash balance at the end of July?
A)-$25,000
B)$28,000
C)-$4,000
D)$85,000

Quizplus · Accepted Answer

The cash balance at the end of July is $28,000. This is calculated by adding the cash collections for July ($53,000) to the beginning cash balance ($32,000) and then subtracting the cash payments for July. The cash payments for July include purchases of direct materials ($20,000), operating expenses ($23,000), and capital expenditures ($14,000), for a total of $57,000. Therefore, the cash balance at the end of July is $32,000 + $53,000 - $57,000 = $28,000.

Chatelain Company Is Preparing Its Budget for the Third Quarter