Question

Sunland Company expects to have a cash balance of $62,450 on January 1, 2017. These are...

Sunland Company expects to have a cash balance of $62,450 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017.

1. Collections from customers: January $87,450, February $162,450.
2. Payments to suppliers: January $56,450, February $91,450.
3. Wages: January $31,370, February $41,370. Wages are paid in the month they are incurred.
4. Administrative expenses: January $22,370, February $25,370. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $16,370, February $21,370. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $13,370 in cash. Sunland Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $36,450.


Prepare a cash budget for January and February.

Homework Answers

Answer #1

Cash budget :

January February
Beginning balance 62450 37710
Cash receipts
Collection from customer 87450 162450
Sale of short term investment 13370
Total cash receipt 100820 162450
Total cash available 163270 200160
Cash disbursement
Payment to supplier 56450 91450
Wages 31370 41370
Administrative expense 21370 24370
Selling expense 16370 21370
Total cash disbursement 125560 178560
excess (deficiency) cash receipt over disbursement 37710 21600
Borrowing (repayment) 14850
Ending cash balance 37710 36450
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