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Zinc Corporation is developing its cash budget for this month. Each month, the firm manufactures and sells $15,000 of products, and it pays $10,000 for wages, taxes, cost of goods sold, and other operating expenses. Zinc has nothing in its checking account even though its target cash balance is $8,000. What amount will Zinc show on the "bottom line" of its cash budget for this month? That is, what will be Zinc's cash position? a. Zinc has surplus cash of $8,000. b. Zinc has surplus cash of $20,000. c. Zinc has surplus cash of $6,000. d. Zinc has a cash shortfall of $23,000. e. Zinc has a cash shortfall of $3,000.

Respuesta :

Answer:

e. Zinc has a cash shortfall of $3,000.

Explanation:

Data provided in the question

Number of sold products value = $15,000

Paid amount of wages, taxes, and other operating expenses = $10,000

Target cash balance = $8,000

So, the bottom line of its cash budget is

= Number of sold products value - Paid amount of wages, taxes, and other operating expenses - Target cash balance

= $15,000 - $10,000 - $8,000

= -$5,000