Question

Cullumber Company expects to have a cash balance of $ 65,150 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017.

1. Collections from customers: January $ 90,150, February $ 165,150.

2. Payments to suppliers: January $ 59,150, February $ 94,150.

3. Wages: January $ 31,120, February $ 41,120. Wages are paid in the month they are incurred.

4. Administrative expenses: January $ 22,120, February $ 25,120. These costs include depreciation of $ 1,000 per month. All other costs are paid as incurred.

5. Selling expenses: January $ 16,120, February $ 21,120. These costs are exclusive of depreciation. They are paid as incurred.

6. Sales of short-term investments in January are expected to realize $ 13,120 in cash. Cullumber 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 $ 39,150.

Prepare a cash budget for January and February.

	January	February
-------	$	$
Add/Less ----
----
----
----
----
Add/Less ----
----
----
----
----
----
----
----
Add/Less ----
Add/Less ----
----

Answer 1

Solution :

Cullumber Company
Cash Budget
For January and February
Particulars	January	February
Beginning cash balance	$65,150.00	$40,910.00
Add: Cash Receipts:
Collection from customers	$90,150.00	$165,150.00
Sales of short term investments	$13,120.00	$0.00
Total cash available	$168,420.00	$206,060.00
Less: Cash disbursements:
Payments to supplier	$59,150.00	$94,150.00
Wages	$31,120.00	$41,120.00
Administrative expenses	$21,120.00	$24,120.00
Selling Expenses	$16,120.00	$21,120.00
Total Cash disbursements	$127,510.00	$180,510.00
Excess of cash available over disbursments	$40,910.00	$25,550.00
Add: Borrowings	$0.00	$13,600.00
Less: Repayments	$0.00	$0.00
Ending cash balance	$40,910.00	$39,150.00