Pletcher Dental Clinic is a medium-sized dental service specializing in family d

Question

Pletcher Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is currently preparing the master budget for the first 2 quarters of 2017. All that remains in this process is the cash budget. The following information has been collected from other portions of the master budget and elsewhere.

Prepare a cash budget for each of the first two quarters of 2017. (Do not leave any answer field blank. Enter 0 for amounts.)

Beginning cash balance $38,220 Required minimum cash balance 31,850 Payment of income taxes (2nd quarter) 5,096 Professional salaries:     1st quarter 178,360     2nd quarter 178,360 Interest from investments (2nd quarter) 8,918 Overhead costs:     1st quarter 98,098     2nd quarter 127,400 Selling and administrative costs, including $2,548 depreciation:     1st quarter 63,700     2nd quarter 89,180 Purchase of equipment (2nd quarter) 63,700 Sale of equipment (1st quarter) 15,288 Collections from clients:     1st quarter 299,390     2nd quarter 484,120 Interest payments (2nd quarter) 255

Explanation / Answer

Cash budget Qtr 1 Qtr 2 Total Opening cash Balance                    38,220                31,850                 38,220 Add: receipts Collection from Customers                  299,390              484,120              783,510 Interest from Investments                             -                     8,918                   8,918 Sale of Equipment                    15,288                          -                   15,288 Total Cash available                  352,898              524,888              845,936 Less: Cash Payments Income Tax                             -                     5,096                   5,096 Professional Salaries                  178,360              178,360              356,720 Overhead Costs                    98,098              127,400              225,498 Selling & Admn. Expenses                    61,152                86,632              147,784 Purchase of Equipment                             -                  63,700                 63,700 Interest Payment                             -                        255                       255 Total Disbursement                  337,610              461,443              799,053 Cash Balance Closing                    15,288                63,445                 46,883 Add: Borrowings from Bank                    16,562                          -                   16,562 Less: Payment to Bank                             -                (16,562)              (16,562) Net Cash Balance Closing                    31,850                46,883                 46,883

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