Questions
1.
Total Cash Available in Month 1 is:
Group of answer choices
$130,000
$19,800
$141,000
$1,000
2.
Total Cash Disbursements in Month 2 is:
Group of answer choices
$25,000
$23,050
$73,900
$18,800
3.
Beginning Cash Balance in Month 5 is:
Group of answer choices
$25,000
$19,300
$50,800
$72,500
4.
Ending Cash Balance in Month 7 is:
Group of answer choices
$57,850
$82,300
$75,600
$24,450
5.
Please note: this question is NOT specifically tied directly to the cash flow projection you created.
After completing a cash flow projection for your new business, you determined that a negative cash balance exists in one or more months. What step(s) could you take to ensure that the company will always have a positive cash flow balance at the end of each month?
Group of answer choices
Decrease the Owner's Draw by more than the largest negative ending cash balance.
All of the responses listed would address the problem.
Invest an additional amount of capital into the business that is more than the largest negative ending cash balance
Take out an additional loan greater than the largest negative ending cash balance
Assumptions:
Beginning Balance $1,000
Sales *** 20,000 per month for months 1-3
25,000 per month for months 4-5
28,000 per month for months 6-12
Cash Sales *** 50% of sales are received in cash; the remaining 50% are collected in A/R the next month
Loan Proceeds 100,000 month 1
Equity Injections 30,000 month 1
Purchases 30% of sales per month
Wage Expense 6,000 per month
Rent Expense 2,000 per month
Utilities Expense 300 per month
Advertising Expense 4,500 month 1
3,500 month 2
2,500 per month for months 3-12
Miscellaneous Expense 200 per month
Interest Expense 600 per month
Insurance Expense 200 per month
Loan Principle Payment 250 per month
Owner's Draw 4,000 per month
Capital Purchases 40,000 month 1
20,000 month 4
