Question
use the following August cash budget information for Q and A company to answer the questions below.
Exam 3-Principles of Accounting 2110 Managerial Fall 2015 Version B Uuse the olowing August cash B Use the following August Cash Budget information for Q & A Company to answer the questions below $26,000 55,000 31,000 9,000 11,000 5,000 Cash balance, August 1 Collections from customers Paid to suppliers Manufacturing overhead Direct labor Selling & administrative expenses Q & A pays wages in the month incurred. Manufacturing overhead includes $1,800 for machinery depreciation, but the amount for selling and administrative expenses is exclusive of depreciation. Additionally, Q & A also expects to buy a piece of property for $25,000 during August. Q & A can borrow in increments of $5,000 and would like to maintain a minimum cash balance of $10,000 for the month of August. SH What is Q & A's cash balance prior to any needed borrowing? How much, if anything, does Q & A need to borrow? What is the company's final budgeted cash balance for August? What is the company's beginning cash balance for September? 28. 29. 30. 31.
Explanation / Answer
28.
29. Minimum cash balnce to be maintained= $10000
Therefor cash available for Investment= $26800-$10000
= $16800
Cost of property= $25000
Amount to be borrowed= 25000-16800
= $8200
Since company can borrow in increments of $5000 therefore Amount that will be borrowed is $10000
30. Final budgeted cash balance = 26800+10000-25000
=$11800
31. Opening Cash Balanc of September= $11800
Particulars Amt. Opening cash balance $26000 Add: Collecion from debtors $55000 Less: Paid to suppliers $31000 Less: Manufaturing OH($9000-$1800) $7200 Less: Wages $11000 Less: selling & admin OH $5000 Closing Cash $26800