Cullumber Company expects to have a cash balance of $87,400 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2022. 1. Collections from customers: January $134,900, February $277,400. 2. Payments to suppliers: January $76,000, February $142,500. 3. Wages: January $57,000, February $76,000. Wages are paid in the month they are incurred. 4. Administrative expenses: January $39,900, February $45,600. These costs include depreciation of $1,900 per month. All other costs are paid as incurred. 5. Selling expenses: January $28,500, February $38,000. These costs are exclusive of depreciation. They are paid as incurred. 6. Sales of short-term investments in January are expected to realize $22,800 in cash. Cullumber Company has a line of credit at a local bank that enables it to borrow up to $47,500. The company wants to maintain a minimum monthly cash balance of $38,000. Prepare a cash budget for January and February.

Question

Business

Raiden Rodgers

1 February, 08:53

Cullumber Company expects to have a cash balance of $87,400 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2022. 1. Collections from customers: January $134,900, February $277,400. 2. Payments to suppliers: January $76,000, February $142,500. 3. Wages: January $57,000, February $76,000. Wages are paid in the month they are incurred. 4. Administrative expenses: January $39,900, February $45,600. These costs include depreciation of $1,900 per month. All other costs are paid as incurred. 5. Selling expenses: January $28,500, February $38,000. These costs are exclusive of depreciation. They are paid as incurred. 6. Sales of short-term investments in January are expected to realize $22,800 in cash. Cullumber Company has a line of credit at a local bank that enables it to borrow up to $47,500. The company wants to maintain a minimum monthly cash balance of $38,000. Prepare a cash budget for January and February.

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Jaime Cantrell · Answer 1

The preparation is shown below

Explanation:

The preparation of the cash budget for January and February is presented below

Particulars January February

Beginning cash balance $87,400 $45,600

Add: Cash receipts

Collection from customers $134,900 $277,400

Sale of short term investments $22,800 $0

Total receipts $157,700 $277,400

Total available cash (A) $245,100 $323,000

Less: Cash disbursements:

Payment to suppliers - $76,000 - $142,500

Wages - $57,000 - $76,000

Administrative expenses - $38,000 - $43,700

Selling expenses - $28,500 - $38,000

Total cash disbursements (B) - $199,500 - $300,200

Excess (Deficiency) of available

cash over disbursements (A-B) $45,600 $22,800

Financing:

Borrowings $15,200

Repayments

Ending cash balance $45,600 $38,000