Company has $ 13500 in cash on hand on January 1 and has collected the following budget data: Assume Hess has cash payments for selling and administrative expenses including salaries of $ 55000 plus commissions of 2% of sales, all paid in the month of sale. The company requires a minimum cash balance of $ 11000. Prepare a cash budget for January and February. Will Hess need to borrow cash by the end of February? Begin by preparing the cash budget for January, then prepare the cash budget for February.
Homework Answers
Cash budget
| January | |
| Beginning Cash balance | 13500 |
| Cash receipts | 851420 |
| Cash available | 864920 |
| Cash payments | |
| Purchase of merchandise inventory | 562000 |
| Payment of salaries and commission | 82000 |
| Total cash payments | 644000 |
| Ending Cash balance before financing | 220920 |
| Project cash excess (Deficiency) | 220920 |
| Financing | |
| Borrowing | 0 |
| Principal repayments | 0 |
| Total effect of financing | 0 |
| Ending Cash balance | 220920 |
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