Question

Pletcher Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is currently preparing the master budget for the first 2 quarters of 2020. All that remains in this process is the cash budget. The following information has been collected from other portions of the master budget and elsewhere. Beginning cash balance $36,900 Required minimum cash balance 30,750 Payment of income taxes (2nd quarter) 4,920 Professional salaries: 1st quarter 172,200 2nd quarter 172,200 Interest from investments (2nd quarter) 8,610 Overhead costs: 1st quarter 94,710 2nd quarter 123,000 Selling and administrative costs, including $2,460 depreciation: 1st quarter 61,500 2nd quarter 86,100 Purchase of equipment (2nd quarter) 61,500 Sale of equipment (1st quarter) 14,760 Collections from clients: 1st quarter 289,050 2nd quarter 467,400 Interest payments (2nd quarter) 246 Prepare a cash budget for each of the first two quarters of 2020. PLETCHER DENTAL CLINIC Cash Budget 1st Quarter 2nd Quarter $ $ : : : : $ $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

Pletcher Dental Clinic
Cash Budget
For the two quarters ended June 30, 2020
	Quarter 1	Quarter 2
Beginning Cash balance	$36,900	$30,750
Add: Receipts:
Collections from Clients                                                                                                                                                                            (a)	$289,050	$467,400
Interest from investments                                                                                                                                                                            (b)		$8,610
Sale of equipment                                                                                                                                                                                       (c)	$14,760
Total Receipts                                                                                                                                                                               (a + b + c)	$303,810	$476,010
Total Cash Available                                                                                                                          [Beginning cash balance + Total receipts]	$340,710	$506,760
Less: Disbursements:
Payments of Income taxes                                                                                                                                                                            (d)		$4,920
Professional Salaries                                                                                                                                                                                   (e)	$172,200	$172,200
Overhead Costs                                                                                                                                                                                            (f)	$94,710	$123,000
Selling and Administrative costs    [1st quarter = $61,500 - $2,460 = $59,040] [2nd quarter = $86,100 - $2,460 = $86,640]                  (g)	$59,040	$83,640
Equipment Purchase                                                                                                                                                                                      (h)		$61,500
Total disbursements                                                                                                                                                            (d + e + f + g + h)	$325,950	$445,260
Excess (Deficiency) of Cash Available Over Cash Disbursements                                                [Total cash available - Total disbursements]	$14,760	$61,500
Financing:
Add: Borrowing                                                                                          [Minimum cash balance - Excess of cash available = $30,750 - $14,760]	$15,990
Less: Repayments                                                                                        [Interest Payment + Borrowings payment = $246 + $15,990]		$16,236
Ending Cash balance	$30,750	$45,264

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Note: Depreciation is a non-cash expense. Hence depreciation shall be deducted from selling and administrative costs