Fayette Medical Clinic has budgeted the following cash flows.February$232,000JanuaryMarchCash receiptsCash paymentsFor inventory purchasesFor S&A expenses$240,000$272,000220,00062,000164,00064,000190,00054,000Fayette Medical had a cash balance of $16,000 on January 1. The company desires to maintain a cash cushion of $10,000. Funds areassumed 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 amonthly $80,000 beginning balance in its line of credit liability account from this year's quarterly results.RequiredPrepare a cash budget. (Any repayments/shortage should be indicated with a minus sign. Round intermediate and final answers tothe nearest whole dollar amounts.)X Answer is not complete.Cash BudgetJanuaryFebruaryMarchSection 1: Cash receiptsBeginning cash balance16,000$10,20013,030Add: Cash receipts240,000 O232,000 O272,000Total cash available256,000242,200285,030Section 2: Cash paymentsFor inventory purchases220,000164,000190,000For S&A expenses62,00064,00054,000Interest expense per month800 V1,170 X1,140 VTotal budgeted disbursements282,800229,170245,140Section 3: Financing activities(26,800)13,03039,890Borrowing (repayment)37,000 XEnding cash balance10,200$13,030$39,890

Cash budget refers to a budget which shows the estimated cash flows of the company during a specific…

Answered: Required Prepare a cash budget. (Any…

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.)

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 3PA: Budgeted income statement and supporting budgets The budget director of Birding Homes Feeders Inc.,...

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Relevant data from the operating budget of The Framers are: Other data: Capital assets were sold in quarter 1 and $8,000 was collected in quarter 1 and $500 collected in quarter 2. Dividends of $500 will be paid in May The beginning cash balance was $50,000 and a required minimum cash balance is $10,000. Prepare a cash budget for the first two quarters of the year.
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Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the follow sales: In Shalimars experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are 4,900,000 and for the fourth quarter of the current year are 6,850,000. Required: 1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year. 2. Construct a cash receipts budget for Shalimar Company for each quarter of the next year, showing the cash sales and the cash collections from credit sales. 3. What if the recession led Shalimars top management to assume that in the next year 10 percent of credit sales would never be collected? The expected payment percentages in the quarter of sale and the quarter after sale are assumed to be the same. How would that affect cash received in each quarter? Construct a revised cash budget using the new assumption.
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