Brewster Corporation expects the following cash receipts and disbursements during the first quarter of 2016 (receipts exclude new borrowings and disbursements exclude interest payments on borrowings since January 1, 2016) January February March Cash receipts $300,000 $320,000 $290,000 Cash disbursements 280,000 360,000 300,000 The expected cash balance at January 1, 2016, is $82,000. Brewster wants to maintain a cash balance at the end of each month of at least $80,000. Short-term borrowings at 1% interest per month will be used to accomplish this, if necessary. Borrowings (in multiples of $1,000) will be made at the beginning of the month in which they are needed, with interest for that month paid at the end of the month. Prepare a cash budget for the quarter ended March 31, 2016. Brewster Corporation Cash Budget for the Quarter Ended March 31, 2016 January February March Beginning cash balance Answer Answer Answer Cash receipts Answer Answer Answer Short-term borrowings Answer Answer Answer Cash available Answer Answer Answer Cash disbursements Answer Answer Answer Interest payment Answer Answer Answer Total cash disbursements Answer Answer Answer Ending cash balance Answer Answer Answer

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Brewster Corporation expects the following cash receipts and disbursements during the first quarter of 2016 (receipts exclude new borrowings and disbursements exclude interest payments on borrowings since January 1, 2016)

		January	February	March
Cash receipts		$300,000	$320,000	$290,000
Cash disbursements		280,000	360,000	300,000

The expected cash balance at January 1, 2016, is $82,000. Brewster wants to maintain a cash balance at the end of each month of at least $80,000. Short-term borrowings at 1% interest per month will be used to accomplish this, if necessary. Borrowings (in multiples of $1,000) will be made at the beginning of the month in which they are needed, with interest for that month paid at the end of the month. Prepare a cash budget for the quarter ended March 31, 2016.

Brewster Corporation Cash Budget for the Quarter Ended March 31, 2016
	January	February	March
Beginning cash balance	Answer	Answer	Answer
Cash receipts	Answer	Answer	Answer
Short-term borrowings	Answer	Answer	Answer
Cash available	Answer	Answer	Answer
Cash disbursements	Answer	Answer	Answer
Interest payment	Answer	Answer	Answer
Total cash disbursements	Answer	Answer	Answer
Ending cash balance	Answer	Answer	Answer

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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