Saltine Company is preparing a cash budget for the month of June. The following

Question

Saltine Company is preparing a cash budget for the month of June. The following information is available:

Cash Balance, May 31, 2017                                $11,000

Cash collections from customers in June                43,000

Cash paid for land in June                                   10,000

Patent amortization expense in June                       5,000

Cash paid for merchandise in June                       20,000

Cash paid for operating expenses in June             20,000

Cash dividend paid in June                                   5,000

The minimum cash balance desired is $5,000. What is the deficiency of cash before financing at June 30, 2017?

A) $(5,000)

B) $(6,000)

C) $(11,000)

D) $(12,000)

Explanation / Answer

Cash Balance, May 31, 2017   11000 Cash collections from customers in June 43000 Cash available 54000 Payments: Cash paid for land in June 10000 Cash paid for merchandise in June 20000 Cash paid for operating expenses in June     20000 Cash dividend paid in June    5000 Total payments 55000 Cash Balance June 30 -1000 Deficiency of cash -6000 Option B is correct

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