Author Question: Trail Industries is preparing its cash budget for the third quarter of the current year. Sales for ... (Read 11 times)

acwiles · **on:** Feb 5, 2023

Question 1

Many new businesses fail not because they are unprofitable, but because
◦ they do not have the expertise to maintain the business.
◦ there is a declining demand for the products.
◦ they run out of cash.
◦ they do not have adequate inventory.

Question 2

Trail Industries is preparing its cash budget for the third quarter of the current year. Sales for the third quarter are budgeted at $870,000 ($290,000 per month). Sales are 80% cash, with the remaining 20% on credit which is collected in the month following the month of sale. On June 30, the cash balance is $48,000, and the Accounts Receivable (all related to June sales) balance is $51,000. Operating expenses for the quarter are budgeted at $464,000, which includes $18,000 of depreciation. Cash expenses are paid in the month incurred. Cash purchases for merchandise inventory are budgeted at $392,000 for the quarter. What is the projected cash balance at the end of the third quarter?
◦ $131,000
◦ $4,000
◦ $73,000
◦ $113,000

hariet5 · **Reply #1 on:** Feb 5, 2023

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