Newman Medical Clinic has budgeted the following cash flows.January February March$101,000 $107,000 $127,000Cash receiptsCash paymentsFor inventorypurchasesFor S&A expensesNewman Medical had a cash balance of $8,500 on January 1. The company desiresto maintain a cash cushion of $6,000. Funds are assumed to be borrowed, in incrementsof $1,000, and repaid on the last day of each month; the interest rate is 2 percent permonth. Repayments may be made in any amount available. Newman pays its vendors onthe last day of the month also. The company had a monthly $40,000 beginning balancein its line of credit liability account from this year's quarterly results.Cash BudgetBeginning cash balanceAdd: Cash receiptCash availableLess: Cash payments90,50031,500RequiredPrepare a cash budget. (Any repayments/shortage should be indicated with a minussign. Round your answers to the nearest whole dollar amount.)For inventory purchasesFor S&A expensesInterest expense per monthTotal budgeted paymentsPayments minus receiptsSurplus (shortage)Financing Activity72,50032,500Borrowing (repayment)85,50027,500$JanuaryFebruary8,500 $ (12,755) $ (10,755)101,000107,000127,000109,50094,245116,24590,50031,500255122,255(12,755)72,50032,500105,000(10,755)$ (12,755) $ (10,755) $March85,50027,500113,0003,2453,245

Budgeting is the process of estimating the revenue, expenses, and cash balances for a specific…

Newman Medical Clinic has budgeted the following cash flows. January February March $101,000 $107,000 $127,000 Cash receipts Cash payments For inventory purchases 90,500 72,500 32,500 For S&A expenses 31,500 85,500 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 ? percent per

Newman Medical Clinic has budgeted the following cash flows. January February March $101,000 $107,000 $127,000 Cash receipts Cash payments For inventory purchases 90,500 72,500 32,500 For S&A expenses 31,500 85,500 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 ? percent per

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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