Jubilee\'s Bakery is budgeting cash for 2017. The cash balance at December 31, 2

Question

Jubilee's Bakery is budgeting cash for 2017. The cash balance at December 31, 2016, was $6,000. Jubilee's Bakery budgets 2017 cash receipts at $81,000. Estimated cash payments include $44,000 for inventory, $34,000 for operating expenses, and $15,000 to expand the store. Jubilee's Bakery needs a minimum cash balance of $13,000 at all times. Jubilee's Bakery expects to earn net income of $76,000 during 2017. What is the final result of the company's cash budget for 2017? O B. There is $19,000 available for additional investments. ( C. Pay off $38,000 of debt. O D. There is $38,000 available for additional investments.

Explanation / Answer

Jubilee's Bakery Cash Budget For the Year 2017 Beginning cash Balance $       6,000 Add: Cash Receipts $     81,000 Cash Available Before payments $     87,000 Less: Cash Payments: Inventory $     44,000 Operating Expense $     34,000 Expand the store $     15,000 Total Payments $     93,000 Cash Available After Payments $     -6,000 Minimum cash payment $     13,000 New Financing $     19,000 Thus, Final Result of Company's cash budget is: A. Must arrange new financing for $ 19,000 Note: Net Income is calculated after reducing all expenses from all incomes.Such expenses or Incomes may or may not have been paid in cash or received in cash.So, Net income will not have any effect on preparig company's cash budget.

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