Answer:
Cash Surplus is $2,181.
Ending short-term debt is $6,936
Explanation:
The cash surplus and ending short term are obtained as follows:
1. Buster's Cash Account for the Quarter
Beginning cash balance $2,780
Cash collected $41,309
Wages and other cash expenses ($18,800)
Payments on account ($21,308)
Dividends paid <u>($1,200)</u>
Total cash balance <u> $2,781</u>
Note that figures in brackets indicate minus/deduction.
Therefore, total cash balance is divided into:
Ending cash balance $600
Cash Surplus <u>$2,181 </u>
Cash balance <u> $2,781</u>
2. Calculation of Short Term Debt Balance for the Quarter
Beginning short-term debt $6,800
Interest ($6,800 × 2%) <u> $136</u>
Ending short-term debt <u>$6,936 </u>
Note:
Note that the interest amount of $136 is added to the beginning short term debt to obtain the ending short term because it is not stated in the question that it was paid during the quarter. Had it been was paid during the quarter, the ending short term debt will be the same as opening amount of $6,800 while cash cash surplus and cash balance will reduce by $136.
