Question

Cullumber Company expects to have a cash balance of $57,200 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2017. 1. Collections from customers: January $82,000, February $137,800 2. Payments to suppliers: January $44,800, February $52,400 3. Wages: January $36,400, February $42,400. Wages are paid in the month they are incurred. 4. Administrative expenses: January $26,400, February $34,100. These costs include depreciation of $1,900 per month. All other costs are paid as incurred. 5. Selling expenses: January $16,800, February $20,200. These costs are exclusive of depreciation. They are paid as incurred. 6. Sales of short-term investments in January are expected to realize $14,000 in cash. Cullumber 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 $27,000. Prepare a cash budget for January and February. (Do not leave any answer field blank. Enter Ofor amounts.)

Answer 1

Solution

CULLUMBER COMPANY
Cash Budget
For the Two months ended February 28, 2022
	January	February
Beginning Cash Balance	$        57,200.00	$    30,700.00
Add: Cash receipts
Collection from customers	$        82,000.00	$ 137,800.00
Cash from sale of investment	$        14,000.00
Total cash receipts	$        96,000.00	$ 137,800.00
Cash Availaible	$     153,200.00	$ 168,500.00
Less: Cash Payments
Payment to supplier	$        44,800.00	$    52,400.00
Payment for wages	$        36,400.00	$    42,400.00
Payment for administrative expenses	$        24,500.00	$    32,200.00
Payment for Selling expenses	$        16,800.00	$    20,200.00
Total Cash Payments	$     122,500.00	$ 147,200.00
Ending Cash Balance Before Financing	$        30,700.00	$    21,300.00
Financing
Borrowing		$       5,700.00
Repayments
Ending Cash Balance	$        30,700.00	$    27,000.00