The controller of Arrowroot Company wishes to improve the company’s control system by preparing a monthly cash budget. The following information relates to the month ending July 31, 2021: June 30, 2021, cash balance$122,000 Dividends were declared on June 15* 40,000 Cash expenditures to be paid in July for operating expenses 81,600 Depreciation expense 12,200 Cash collections to be received 194,000 Merchandise purchases to be paid in cash 120,400 Equipment to be purchased for cash 45,800 Arrowroot Company wishes to maintain a minimum cash balance of 62,000 *Dividends are payable to shareholders of record on declaration date, 30 days after declaration. Required:1. Prepare a cash budget for the month ended July 31, 2021, indicating how much, if anything, Arrowroot will need to borrow to meet its minimum cash requirement. Leave no cells blank - be certain to enter "0" wherever required

Cash Budgets are generally prepared to reconcile cash flows for the month with the available cash…

Answered: controller of Arrowroot Company wishes…

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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The controller of Arrowroot Company wishes to improve the company’s control system by preparing a monthly cash budget. The following information relates to the month ending July 31, 2021:


June 30, 2021, cash balance	$	122,000
Dividends were declared on June 15*		40,000
Cash expenditures to be paid in July for operating expenses		81,600
Depreciation expense		12,200
Cash collections to be received		194,000
Merchandise purchases to be paid in cash		120,400
Equipment to be purchased for cash		45,800
Arrowroot Company wishes to maintain a minimum cash balance of		62,000

*Dividends are payable to shareholders of record on declaration date, 30 days after declaration.

Required:

1. Prepare a cash budget for the month ended July 31, 2021, indicating how much, if anything, Arrowroot will need to borrow to meet its minimum cash requirement. Leave no cells blank - be certain to enter "0" wherever required

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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