Newman Medical Clinic has budgeted the following cash flows. Cash receipts January February March $109,000 $115,000 $135,000 Cash payments For inventory 94,500 76,500 89,500 purchases For S&A expenses 35,500 36,500 31,500 Newman Medical had a cash balance of $12,500 on January 1. The company desires to maintain a cash cushion of $8,000. Funds are assumed to be borrowed, in increments of $1,000, 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. Newman pays its vendors on the last day of the month also. The company had a monthly $40,000 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 your answers to the nearest whole dollar amount.)
Newman Medical Clinic has budgeted the following cash flows. Cash receipts January February March $109,000 $115,000 $135,000 Cash payments For inventory 94,500 76,500 89,500 purchases For S&A expenses 35,500 36,500 31,500 Newman Medical had a cash balance of $12,500 on January 1. The company desires to maintain a cash cushion of $8,000. Funds are assumed to be borrowed, in increments of $1,000, 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. Newman pays its vendors on the last day of the month also. The company had a monthly $40,000 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 your answers to the nearest whole dollar amount.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Newman Medical Clinic has budgeted the following cash flows.
Cash receipts
Cash payments
January February March
$109,000 $115,000 $135,000
For inventory
purchases
For S&A
expenses
94,500 76,500 89,500
35,500 36,500 31,500
Newman Medical had a cash balance of $12,500 on January 1. The company desires.
to maintain a cash cushion of $8,000. Funds are assumed to be borrowed, in increments
of $1,000, 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. Newman pays its vendors on
the last day of the month also. The company had a monthly $40,000 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 your answers to the nearest whole dollar amount.)
Cash Budget
Cash available
Less: Cash payments
Total budgeted payments
Payments minus receipts
Financing Activity
January
February
March
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