Question

Jefferson Company has the following information:

Cash Balance, April 31                                                $45,000

Dividends paid in May                                                12,000

Cash paid for operating expenses in May                 36,800

Equipment depreciation expense in May                    4,500

Patent amortization expense in May                            2,000

Cash collections on sales in May                                99,000

Merchandise purchases paid in May                         56,200

Purchase equipment for cash in May                         17,500

Jefferson Company wants to keep a minimum cash balance of $15,000. Assume that borrowing occurs at the beginning of the month and repayments occur at the end of the month. Interest of 1% is paid in cash at the end of each month when debt is outstanding. Borrowing and repayments are carried out in multiples of $1,000.

Prepare a cash budget for May

Answer 1

Cash Budget For May
Beginning cash balance	45,000
Add:Budgeted cash receipts	99,000
Total available cash (1)	144,000
Less:Budgeted cash payments:
Dividends paid in May	-12,000
Cash paid for operating expenses in May	-36,800
Merchandise purchases paid in May	-56,200
Purchase equipment for cash in May	-17,500
Total cash payments (2)	-122,500
Ending cash balance (1-2)	$21,500

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