Blossom Company expects to have a cash balance of $57,600 on January 1, 2017. Th
ID: 2392371 • Letter: B
Question
Blossom Company expects to have a cash balance of $57,600 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017. 1. Collections from customers: January $82,600, February $157,600. 2. Payments to suppliers: January $51,600, February $86,600 3. Wages: January $31,580, February $41,580. Wages are paid in the month they are incurred. 4, Administrative expenses: January $22,580, February $25,580. These costs include depreciation of $1,000 per month. All other costs are paid as incurred 5. Selling expenses: January $16,580, February $21,580. These costs are exclusive of depreciation. They are paid as incurred 6. Sales of short-term investments in January are expected to realize $13,580 in cash. Blossom Company 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 $31,600 Prepare a cash budget for January and February BLOSSOM COMPANY Cash Budget For the Two Months Ending February 28, 2017 Janua Februar nning cash balanc sh rece ollections from custome 260 57 otal receipts ash disbursements ayments to suppli 160 158 dministrative expens 22580 25580 lling expens 658 158Explanation / Answer
Cash budget Jan Feb Beginning Balance of cash 57600 32440 Add: Receipts Collections from Customer 82600 157600 Sales of Short term investment 13580 Total receipts 96180 157600 Total cash balance available 153780 190040 Less: Cash disbursement Payment to suppliers 51600 86600 Wages paid 31580 41580 Admin expense paid 21580 24580 Selling expense paid 16580 21580 Total disbursement 121340 174340 Net cash balance 32440 15700 Financing: Borrowings 0 15900 Repayment 0 0 Ending cash balance 32440 31600