Question

Check my wor Problem 14-20 Preparing a cash budget LO 14-5 Fayette Medical Clinic has budgeted the following cash flows: January $240,000 February $232,000 March Cash receipts Cash payments For inventory purehases For S&A expenses $272,000 220,000 62,000 164,000 64,000 190,000 54,000 Fayette Medical had a cash balance of $16,000 on January 1. The company desires to maintain a cash cushion of $10,00o0. Funds are assumed to be borrowed, in increments of $2,000, and repaid on the last day of each month; the interest rate is 1 percent per month. Repayments may be made in any amount available. Fayette pays its vendors on the last day of the month also. The company had a monthly $80,000 beginning balance in its line of credit liability account from this year's quarterly results Required Prepare a cash budget. (Any repayments/shortage should be indicated with a minus sign. Round intermediate and final answers to the nearest whole dollar amounts.) Cash Budget January February March Cash available Less: Cash payments <Prev 4 of 4 Next

Answer 1

January 1 16,000 $ 240,000 $ 256,000 $ February 11,200 $ 232,000 $ 243,200 $ March 10,000 272,000 282,000 $ $ $ Cash Budget Beginning cash balance Add: Cash receipts Cash available Less: Cash payments For inventory purchases For S&A expenses Interest expense per month Total budgeted payments Payment minus surplus Surplus (shortage) Financing Activity Borrowing (repayment) Ending cash balance 220,000 $ 62,000 $ 800 $ 282,800 $ 164,000 $ 64,000 $ 1,180 $ 229,180 $ 190,000 54,000 1,140 245,140 -26,800 $ 14,020 $ 36,860 38,000 $ 11,200 $ 4,020 10,000 $ $ -26,860 10,000 $ Line of Credit Beginning balance Borrowing (repayment) Ending balance January 80,000 $ 38,000 $ 118,000 $ February 118,000 $ 4,020 $ 113,980 $ March 113,980 -26,860 87,120 $