Question

CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 7-14 Cullumber Company expects to have a cash balance of $58,650 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017 1. Collections from customers: January $83,650, February $158,650. 2. Payments to suppliers: January $52,650. February 587,650 3. Wages: January $31,860, February $41,860, Wages are paid in the month they are incurred 4. Administrative expenses: January $22,850, February $25,860. These costs include depreciation of $1,000 per month. All other costs are paid as incurred. 5. Seling expenses: January $16,850, February $21,860. These costs are exclusive of depreciation. They are paid as incurred. 6. Sales of short-term investments in January are expected to realize $13,860 in cash, lumber Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $32,650. Prepare a cash budget for January and February CULLUMBER COMPANY Cash Budget I a. I 2000-2019 W AS . All Reserved. A Division of Ihn Wie Son

Answer 1

January February 58650 32650 CASH BUDGET Particulars 1 Opnenig Cash Balance Receipts 2 Collections From Customers 3 Sale of short term Investments 158650 83650 13860 17580 176230 97510 Line Credit - Amount Borrowed $17580 from 4 bank to meet desired monthly balance $32650 5 Total Receipts[(1)+(2)+(3)+(4)] Payments 6 Payment to Supplliers 7 Wages 8 Administrative Expenses(Notel) 9 Selling Expenses Amount Invested in Bank excess cash of 280 $(58650+97510-123230) to maintain the 10 monthly balance of Rs32650 (note 2) 11 Total of Payments(6+7+8+9+10) 12 Minimum Monthly Cash Balance[(1)+(5)-(11)] 52650 31860 21860 16860 87650 41860 24860 21860 280 123510 32650 176230 32650

Note: Particulars Administrative Expenses Depreciation Net Administative Expenses January February 22860 25860 1000 1000 21860 24860 Note: It is assumed that surplus balance at the end invested in bank to maintain the desired level of monthly balance