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Required Prepare a cash budget. (Any repayments/shortage should be indicated with a minus sign. Round intermediate and final answers to the nearest whole dollar amounts.)

Required Prepare a cash budget. (Any repayments/shortage should be indicated with a minus sign. Round intermediate and final answers to the nearest whole dollar amounts.)

FINANCIAL ACCOUNTING
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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Fayette Medical Clinic has budgeted the following cash flows. February $232,000 January March Cash receipts Cash payments For inventory purchases For S&A expenses $240,000 $272,000 220,000 62,000 164,000 64,000 190,000 54,000 Fayette Medical had a cash balance of $16,000 on January 1. The company desires to maintain a cash cushion of $10,000. Funds are assumed to be borrowed, in increments of $2,000, and repaid on the last day of each month; the interest rate is 1 percent per month. Repayments may be made in any amount available. Fayette pays its vendors on the last day of the month also. The company had a monthly $80,000 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 intermediate and final answers to the nearest whole dollar amounts.) X Answer is not complete. Cash Budget January February March Section 1: Cash receipts Beginning cash balance 16,000 $ 10,200 13,030 Add: Cash receipts 240,000 O 232,000 O 272,000 Total cash available 256,000 242,200 285,030 Section 2: Cash payments For inventory purchases 220,000 164,000 190,000 For S&A expenses 62,000 64,000 54,000 Interest expense per month 800 V 1,170 X 1,140 V Total budgeted disbursements 282,800 229,170 245,140 Section 3: Financing activities (26,800) 13,030 39,890 Borrowing (repayment) 37,000 X Ending cash balance 10,200 $ 13,030 $ 39,890
Transcribed Image Text:Fayette Medical Clinic has budgeted the following cash flows. February $232,000 January March Cash receipts Cash payments For inventory purchases For S&A expenses $240,000 $272,000 220,000 62,000 164,000 64,000 190,000 54,000 Fayette Medical had a cash balance of $16,000 on January 1. The company desires to maintain a cash cushion of $10,000. Funds are assumed to be borrowed, in increments of $2,000, and repaid on the last day of each month; the interest rate is 1 percent per month. Repayments may be made in any amount available. Fayette pays its vendors on the last day of the month also. The company had a monthly $80,000 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 intermediate and final answers to the nearest whole dollar amounts.) X Answer is not complete. Cash Budget January February March Section 1: Cash receipts Beginning cash balance 16,000 $ 10,200 13,030 Add: Cash receipts 240,000 O 232,000 O 272,000 Total cash available 256,000 242,200 285,030 Section 2: Cash payments For inventory purchases 220,000 164,000 190,000 For S&A expenses 62,000 64,000 54,000 Interest expense per month 800 V 1,170 X 1,140 V Total budgeted disbursements 282,800 229,170 245,140 Section 3: Financing activities (26,800) 13,030 39,890 Borrowing (repayment) 37,000 X Ending cash balance 10,200 $ 13,030 $ 39,890
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