You recently began a job as an accounting intern at Raymond Adventures. Your first task was to help prepare the cash budget for February and March. Unfortunately, the computer with the budget file crashed, and you did not have a backup or even a hard copy. You ran a program to salvage bits of data from the budget file. After entering the following data in the budget, you may have just enough information to reconstruct the budget. Raymond Adventures eliminates any cash deficiency by borrowing the exact amount needed from State Street Bank, where the current interest rate is 8%. Raymond Adventures pays interest on its outstanding debt at the end of each month. The company also repays all borrowed amounts at the end of the month as cash becomes available. Complete the following cash budget: Raymond Adventures Cash Budget February and March February March Beginning cash balance $16,400 $ ? Plus: Cash collections ? 79,700 Plus: Cash from sale of plant assets 0 1,800 Total cash available $106,800 $ ? Less: Cash payments (purchase inventory) $ ? $41,300 Less: Cash payments (operating expenses) 47,100 ? Total cash payments $97,900 $ ? (1) Ending cash balance before financing $ ? $24,300 Minimum cash balance desired 22,000 22,000 Cash excess (deficiency) $ ? $ ? Financing: Plus: New borrowings $ ? $ ? Less: Debt repayments ? ? Less: Interest payments ? ? (2) Total effects of financing $ ? $ ? Ending cash balance (1) + (2) $ ? $ ?

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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You recently began a job as an accounting intern at Raymond Adventures. Your first task was to help prepare the cash budget for February and March. Unfortunately, the computer with the budget file crashed, and you did not have a backup or even a hard copy. You ran a program to salvage bits of data from the budget file. After entering the following data in the budget, you may have just enough information to reconstruct the budget.

Raymond Adventures eliminates any cash deficiency by borrowing the exact amount needed from State Street Bank, where the current interest rate is 8%. Raymond Adventures pays interest on its outstanding debt at the end of each month. The company also repays all borrowed amounts at the end of the month as cash becomes available.

Complete the following cash budget:

Raymond Adventures
Cash Budget
February and March
	February	March
Beginning cash balance	$16,400	$ ?
Plus: Cash collections	?	79,700
Plus: Cash from sale of plant assets	0	1,800
Total cash available	$106,800	$ ?
Less: Cash payments (purchase inventory)	$ ?	$41,300
Less: Cash payments (operating expenses)	47,100	?
Total cash payments	$97,900	$ ?
(1) Ending cash balance before financing	$ ?	$24,300
Minimum cash balance desired	22,000	22,000
Cash excess (deficiency)	$ ?	$ ?
Financing:
Plus: New borrowings	$ ?	$ ?
Less: Debt repayments	?	?
Less: Interest payments	?	?
(2) Total effects of financing	$ ?	$ ?
Ending cash balance (1) + (2)	$ ?	$ ?

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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