Gibson Medical Clinic has budgeted the following cash flows:     January February March Cash receipts $ 108,000   $ 114,000   $ 134,000   Cash payments                   For inventory purchases   94,000     76,000     89,000   For S&A expenses   35,000     36,000     31,000       Gibson Medical had a cash balance of $12,000 on January 1. The company desires to maintain a cash cushion of $7,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 3 percent per month. Repayments may be made in any amount available. Gibson pays its vendors on the last day of the month also. The company had a monthly $40,000 beginning balance in its line of credit liability account from this year’s quarterly results.   prepare the cash budget

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Gibson Medical Clinic has budgeted the following cash flows:

 

  January February March
Cash receipts $ 108,000   $ 114,000   $ 134,000  
Cash payments                  
For inventory purchases   94,000     76,000     89,000  
For S&A expenses   35,000     36,000     31,000  
 

 

Gibson Medical had a cash balance of $12,000 on January 1. The company desires to maintain a cash cushion of $7,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 3 percent per month. Repayments may be made in any amount available. Gibson pays its vendors on the last day of the month also. The company had a monthly $40,000 beginning balance in its line of credit liability account from this year’s quarterly results.

 

prepare the cash budget

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