Question

Cash budget financial accounting help please!?

Mayfield Company expects to have a cash balance of $46,000 on January 1, 2010. These are the relevant monthly budget data for the first two months of 2010.

1.Collections from customers: January $75,000, February $146,000

2.Payments to suppliers: January $40,000, February $75,000

3.Wages: January $30,000, February $40,000. Wages are paid in the month they are incurred.

4.Administrative expenses: January $21,000, February $31,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.

5.Selling expenses: January $15,000, February $20,000. These costs are exclusive of depreciation. They are paid as incurred.

6.Sales of short-term investments in January are expected to realize $12,000 in cash. Mayfield has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $20,000.

Complete the cash budget for January and February below. (List multiple items under receipts, disbursements and financing from largest to smallest amounts, e.g. 10, 5, 2.)

Answers

. . . . . . . . . . . . . . . . . . . . .January. . . . . . . . . . . . . . .February

Beginning Balance . . . . . . . $46,000 . . . . . . . . . . . . . $..28,000

Cash Receipts

Customer Collections. . . . . ...75,000 . . . . . . . . . . . . . . 146,000

Investment Sales. . . . . . . . . .12,000

Total Receipts . . . . . . . . . . . 87,000 . . . . . . . . . . . . . . .146,000

Cash Disbursements

Payments to Suppliers . . . . . 40,000 . . . . . . . . . . . . . . . 75,000

Wages . . . . . . . . . . . . . . . . .30,000. . .. . . . . . . . . . . . . 40,000

Administrative Wages . . . . . . 20,000 . . . . . . . . . . . . . . . 30,000

Selling Expenses . . . . . . . . . 15,000 . . . . . . . . . . . . . . . 20,000

Total Disbursements. . . . . . .105,000 . . . . . . . . . . . . . . 165,000

Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000

Ending Balance . . . . . . . . . .$28,000 . . . . . . . . . . . . . .$.20,000

#1