Monette Company is a manufacturer that is preparing its budget for the upcoming quarter. has prepared the following summary of it budgeted cash flows: August $159.000 September $122.000 July Total cash receipts $96,000 S149.000 Total cash disbursements $105,000 $133,000 The cash balance as of the first day of the third quarter is projected to be $32,000. The company requires a minimum cash balance of $25,000 and may borrow any amount needed from a local bank at a monthly interest rate of 2%. If the company has more than its minimum balance at the end of any given month, it uses the excess funds to pay off any outstanding loan balance. Each month, Monette pays interest on the prior month's ending loan balance. All borrowings, interest payments and pay offs happen on the first day of the month. As of the first day of the third quarter, Monette did not have a loan balance. For simplicity. assume that interest is not compounded. Required: Prepare the company's cash budget for the third quarter, with a column for each month and for the quarter total.
Monette Company is a manufacturer that is preparing its budget for the upcoming quarter. has prepared the following summary of it budgeted cash flows: August $159.000 September $122.000 July Total cash receipts $96,000 S149.000 Total cash disbursements $105,000 $133,000 The cash balance as of the first day of the third quarter is projected to be $32,000. The company requires a minimum cash balance of $25,000 and may borrow any amount needed from a local bank at a monthly interest rate of 2%. If the company has more than its minimum balance at the end of any given month, it uses the excess funds to pay off any outstanding loan balance. Each month, Monette pays interest on the prior month's ending loan balance. All borrowings, interest payments and pay offs happen on the first day of the month. As of the first day of the third quarter, Monette did not have a loan balance. For simplicity. assume that interest is not compounded. Required: Prepare the company's cash budget for the third quarter, with a column for each month and for the quarter total.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:Monette Company is a manufacturer that is preparing its budget for the upcoming quarter. Management
has prepared the following summary of it budgeted cash flows:
July
$96,000
September
$122,000
August
Total cash receipts
Total cash disbursements
$159.000
S149.000
$105,000
$133.000
The cash balance as of the first day of the third quarter is projected to be $32,000. The company requires a
minimum cash balance of $25,000 and may borrow any amount needed from a local bank at a monthly
interest rate of 2%. If the company has more than its minimum balance at the end of any given month, it
uses the excess funds to pay off any outstanding loan balance. Each month, Monette pays interest on the
prior month's ending loan balance. All borrowings, interest payments and pay offs happen on the first day
of the month. As of the first day of the third quarter, Monette did not have a loan balance. For simplicity,
assume that interest is not compounded.
Required:
Prepare the company's cash budget for the third quarter, with a column for each month and for the quarter
total.
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