Newman Medical Clinic has budgeted the following cash flows. Cash receipts Cash payments For inventory purchases January February March $101,000 $107,000 $127,000 90,500 72,500 85,500 For S&A expenses 31,500 32,500 27,500 Newman Medical had a cash balance of $8,500 on January 1. The company desires. to maintain a cash cushion of $6,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 2 percent per month. Repayments may be made in any amount available. Newman 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. Required Prepare a cash budget. (Any repayments/shortage should be indicated with a minus sign. Round your answers to the nearest whole dollar amount.) Cash Budget Cash available Less: Cash payments Total budgeted payments Payments minus receipts Financing Activity January February March

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question

Manji 

Newman Medical Clinic has budgeted the following cash flows.
Cash receipts
Cash payments
For inventory
purchases
January February March
$101,000 $107,000 $127,000
90,500 72,500 85,500
For S&A expenses 31,500 32,500 27,500
Newman Medical had a cash balance of $8,500 on January 1. The company desires.
to maintain a cash cushion of $6,000. Funds are assumed to be borrowed, in increments
of $1,000, and repaid on the last day of each month; the interest rate is 2 percent per
month. Repayments may be made in any amount available. Newman 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.
Required
Prepare a cash budget. (Any repayments/shortage should be indicated with a minus
sign. Round your answers to the nearest whole dollar amount.)
Cash Budget
Cash available
Less: Cash payments
Total budgeted payments
Payments minus receipts
Financing Activity
January
February
March
Transcribed Image Text:Newman Medical Clinic has budgeted the following cash flows. Cash receipts Cash payments For inventory purchases January February March $101,000 $107,000 $127,000 90,500 72,500 85,500 For S&A expenses 31,500 32,500 27,500 Newman Medical had a cash balance of $8,500 on January 1. The company desires. to maintain a cash cushion of $6,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 2 percent per month. Repayments may be made in any amount available. Newman 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. Required Prepare a cash budget. (Any repayments/shortage should be indicated with a minus sign. Round your answers to the nearest whole dollar amount.) Cash Budget Cash available Less: Cash payments Total budgeted payments Payments minus receipts Financing Activity January February March
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education