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    Cash overage or shortage

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    Company A budgeted the following transactions from March:

    Sales (60% collected in month of sales) $180,000
    Cash Operating Expenses $105,000
    Cash purchases of Capital Investments $50,000
    Cash repayment on note payable $40,000
    Depreciation of equipment $25,000

    There was a $35,000 beginning cash balance. Sales for February were $75,000 and 40% expected to be collected in the month following the sales. The company desires to have $20,000 and the cash blance. Determine the amount of cash overage or shortage.

    Is it $42,000 short?
    $23,000 overage?
    $22,000 shortage?
    $43,000 overage?

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    Solution Preview

    The cash collection in the month is
    February Sales (40% to be collected in March) = 75,000X0.4=30,000
    March Sales (60% to be collected in March) = ...

    Solution Summary

    The solution explains how to calculate the amount of cash overage or shortage.