Pharoah Company expects to have a cash balance of $101,200 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2022.1. Collections from customers: January $156,200, February $321,200.2. Payments to suppliers: January $88,000, February $165,000.3. Wages: January $66,000, February $88,000. Wages are paid in the month they are incurred.4. Administrative expenses: January $46,200, February $52,800. These costs include depreciation of $2,200 per month. All other costs are paid as incurred.5. Selling expenses: January $33,000, February $44,000. These costs are exclusive of depreciation. They are paid as incurred.6. Sales of short-term investments in January are expected to realize $26,400 in cash. Pharoah Company has a line of credit at a local bank that enables it to borrow up to $55,000. The company wants to maintain a minimum monthly cash balance of $44,000.

Budget information is outlined as information about the broad funding priorities set forth by a…

Answered: Pharoah Company expects to have a cash…

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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Pharoah Company expects to have a cash balance of $101,200 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2022.

1.		Collections from customers: January $156,200, February $321,200.
2.		Payments to suppliers: January $88,000, February $165,000.
3.		Wages: January $66,000, February $88,000. Wages are paid in the month they are incurred.
4.		Administrative expenses: January $46,200, February $52,800. These costs include depreciation of $2,200 per month. All other costs are paid as incurred.
5.		Selling expenses: January $33,000, February $44,000. These costs are exclusive of depreciation. They are paid as incurred.
6.		Sales of short-term investments in January are expected to realize $26,400 in cash. Pharoah Company has a line of credit at a local bank that enables it to borrow up to $55,000. The company wants to maintain a minimum monthly cash balance of $44,000.

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