# The Illinois Central Corporation is preparing their Cash Budget

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## Description

The Illinois Central Corporation is preparing their Cash Budget fro the forthcoming calendar year. The following data has been prepared for cash receipts and payments:

January February March

Cash receipts \$1,061,200 \$1,182,400 \$1,091,700
Cash payments \$984,500 \$1,210,000 \$1,075,000

The corporation cash balance January 1st is \$290,000. Illinois Central Corporation’s desires minimum cash balance of \$340,000 each month.

1. What is the amount of excess cash or deficiency of cash (after considering the minimum cash balance required) for February?

a. \$109,100 deficiency
b. \$10,900 excess
c. \$900 deficiency
d. \$109,100 excess
e. \$10,900 deficiency

2. What is the amount of excess cash or deficiency of cash (after considering the minimum cash balance required) for March?

a. \$214,200 excess
b. \$15,800 excess
c. \$ 60,00 deficiency
d. \$25,300 excess
e. \$30,500 deficiency

3. The charter of the Kansas, Osage, and Oklahoma Corporation provides for the issuance of 100,000 shares of common stock. If the corporation originally issued 60,000 shares of common stock and 5,000 shares of common stock were subsequently reacquired, what is the amount of cash dividends to be paid if a \$1 per share common stock dividend is declared?

a. \$60,000
b. \$5,000
c. \$100,000
d. \$55,000
e. \$75,000

4. The Baltimore and Ohio Corporation maintains 6,000 shares of 5%, \$100 par value, cumulative preferred stock and 50,000 shares of \$1 par value common stock outstanding at the end of the calender year. What is the annual dividend on the preferred stock?

a. \$50 per share
b. \$30,000 in total
c. \$300 in total
d. \$.50 per share
e. \$3,000 in total

5. On April 1st, 2010, the Wabash Corporation purchased \$50,000 of Chicago and Eastern Illinois Corporation’s 12% bonds at 100 plus accrued interest of \$2,000. On June 30th, 2010, Wabash Corporation sold \$40,000 of the bonds at 101 plus accrued interest.The journal entry to record the April 1st, 2010 purchase will include

a. a credit to Interest Payable for \$2,000
b. a debit to Investments-Chicago and Eastern Illinois Corporation for \$52,000
c. a credit to Cash for \$50,000
d. a debit to Investments-Chicago and Eastern Illinois Corporation for \$50,000
e. a credit to Unrealized Holding Gains and Losses-Equity for \$2,000

6. Gulf Mobile, and Ohio Corporation’s current period Statement of Cash Flows includes the following:

Cash used in financing activities \$97,000
Cash balance at the beginning of the period 310,000
Cash used in investing activities 43,000
Cash provided by operating activities 185,000

The amount of the cash balance at the end of the period is

a. \$45,000
b. \$635,000
c. \$355,000
d. \$125,000
e. \$325,000

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