Question

Exercise 216 Holcomb Company expects to have a cash balance of $43,000 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017. 1. Collections from customers: January $85,000, February $132,000 2. Payments to suppliers: January $40,000, February $50,000 * Wages: January $34,000, February $40,000. Wages are paid in the month they are incurred. Administrative expenses: January $24,000, February $31,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred. 5. Selling expenses: January $15,000, February $20,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of short-term investments in January are expected to realize $12,000 in cash. Holcomb has a line of credit at a local bank that enables it to borrow up to $40,000. The company wants to maintain a minimum monthly cash balance of $25,000. Prepare a cash budget for January and February. (If answer is zero, please enter 0. Do not leave any fields blank.) HOLCOMB COMPANY Cash Budget January

Answer 1

HOLCOMB COMPANY
Cash Budget
For the Two Months Ending February 28, 2017
	January	February
Beginning cash balance	$ 43,000.00	$ 28,000.00
Add: Receipts
Collections from customers	85,000.00	132,000.00
Sale of short-term investments	12,000.00	-
Total receipts	97,000.00	132,000.00
Total available cash	140,000.00	160,000.00
Less: Disbursements
Payments to suppliers	40,000.00	50,000.00
Wages	34,000.00	40,000.00
Administrative expenses	23,000.00	30,000.00
Selling expenses	15,000.00	20,000.00
Total disbursements	112,000.00	140,000.00
Excess (deficiency) of available cash over disbursements	28,000.00	20,000.00
Financing
Borrowings	-	5,000.00
Repayments	-	-
Ending cash balance	$ 28,000.00	$ 25,000.00