Question

Blue Spruce Corp. prepares monthly cash budgets. Here are relevant data from operating budgets for 2017.

January February

Sales $360,700 $401,100

Purchases 121,500 131,400

Salaries 84,600 81,000

Administrative expenses 71,000 73,700

Selling expenses 79,000 86,900

All sales and purchases are on account. Budgeted collections and disbursement data are given below. All other expenses are paid in the month incurred except for administrative expenses, which include $1,200 of depreciation per month.

Other data.

1. Collections from customers: January $328,100;February $378,200.

2. Payments for purchases: January $111,400;

February $144,900.

3. Other receipts: January: collection of December 31, 2016, notes receivable $18,400; February: proceeds from sale of securities $5,500.

4. Other disbursements: February $13,000 cash dividend.

The company’s cash balance on January 1, 2017, is expected to be $47,400. The company wants to maintain a minimum cash balance of $45,910.

Prepare a cash budget for January and February.

Answer 1

			Jan	Feb
Cash budget:
Cash Balance Beginning			47400	49100
Cash collection from customer			328100	378200
Collection from Notes receivable			18400
Sales of securities				5500
Total Available cash			393900	432800
Less: Disbursement
Purchase of inventory			111400	144900
Selling expense			79000	86900
Salaries			84600	81000
Admin expense			69800	72500
Dividend paid				13000
Total disbursement			344800	398300
Excess (Deficiency)			49100	34500
Financing:
Borrowings			0	11410
Repayments including Interest			0
Total financing			0	11410
Cash Balance, ending			49100	45910