Of vital importance to the company’s operations is the efficient management of its cash resources.Consequently your are asked to look into the cash management procedures and prepare an appropriate report. The following information is relevant for the current period: (please refer to images)You are required to: Prepare a Cash Budget for the first two quarters of the year. Sale of Equipment – 1st Quarter$ 12,000Collections from Customers$ 245,000$ 390,0001st Quarter2nd QuarterInterest Payments – 2nd Quarter$400 Opening Cash BalanceRequired Minimum Cash Balance$ 30,000$ 20,000$ 4,000Payment of Income taxes – 2nd QuarterProfessional Salaries;$ 145,000$ 145,000$1st Quarter2nd QuarterInterest from Investments- 2nd Quarter7,000Overhead Costs$ 95,000$ 120,0001st Quarter2nd QuarterSelling & Administration Costs1st Quarter$ 50,000$ 70,0002nd QuarterThese costs include depreciation of $ 3,000Purchase of Equipment – 2nd Quarter$ 50,000

A cash budget is an estimation of the future cash inflows and outflows of a business over a specific…

Answered: Opening Cash Balance Required Minimum…

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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Of vital importance to the company’s operations is the efficient management of its cash resources.

Consequently your are asked to look into the cash management procedures and prepare an appropriate report.

The following information is relevant for the current period: (please refer to images)

You are required to:

Prepare a Cash Budget for the first two quarters of the year.

Sale of Equipment – 1st Quarter
$ 12,000
Collections from Customers
$ 245,000
$ 390,000
1st Quarter
2nd Quarter
Interest Payments – 2nd Quarter
$
400

Opening Cash Balance
Required Minimum Cash Balance
$ 30,000
$ 20,000
$ 4,000
Payment of Income taxes – 2nd Quarter
Professional Salaries;
$ 145,000
$ 145,000
$
1st Quarter
2nd Quarter
Interest from Investments- 2nd Quarter
7,000
Overhead Costs
$ 95,000
$ 120,000
1st Quarter
2nd Quarter
Selling & Administration Costs
1st Quarter
$ 50,000
$ 70,000
2nd Quarter
These costs include depreciation of $ 3,000
Purchase of Equipment – 2nd Quarter
$ 50,000

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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