Oriole Company expects to have a cash balance of $57,550 on
January 1, 2017. These are the relevant monthly budget data for the
first two months of 2017.
1. | Collections from customers: January $82,550, February $157,550. | |
2. | Payments to suppliers: January $51,550, February $86,550. | |
3. | Wages: January $30,850, February $40,850. Wages are paid in the month they are incurred. | |
4. | Administrative expenses: January $21,850, February $24,850. These costs include depreciation of $1,000 per month. All other costs are paid as incurred. | |
5. | Selling expenses: January $15,850, February $20,850. These costs are exclusive of depreciation. They are paid as incurred. | |
6. | Sales of short-term investments in January are expected to realize $12,850 in cash. Oriole 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 $31,550. |
Prepare a cash budget for January and February.
January | Feburary | ||||||
Beginning cash balance | 57,550 | 33,850 | |||||
Add:Receipts | |||||||
Sale of Marketable securities | 12,850 | 0 | |||||
collections from customers | 82,550 | 157,550 | |||||
total receipts | 95,400 | 157,550 | |||||
total cash available | 152,950 | 191,400 | |||||
less:disbursements | |||||||
payment to suppliers | 51,550 | 86,550 | |||||
Direct labor | 30,850 | 40,850 | |||||
Administrative expense | 20,850 | 23,850 | |||||
Selling expense | 15,850 | 20,850 | |||||
total Disbursements | 119,100 | 172,100 | |||||
Excess(Deficiency)of Available cash over disbursement | 33,850 | 19,300 | |||||
financing: | |||||||
Add:Borrowings | 0 | 12,250 | |||||
less:Repayments | 0 | 0 | |||||
ending cash balance | 33,850 | 31,550 | |||||
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