Pisani Dental Clinic is a medium-sized dental service specializing in family den
ID: 2551009 • Letter: P
Question
Pisani Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is currently preparing the budget for the first two quarters of 2016. It still needs to do only the cash budget. It has collected the following information from parts of the master budget and elsewhere: Beginning cash balance Required minimum cash balance Payment of income taxes (2nd quarter) Professional salaries: $30,500 19,800 4,500 1st quarter 2nd quarter 140,500 140,400 7,400 Interest from investments (2nd quarter) Overhead costs: 1st quarter 2nd quarter 92,600 116,100 Selling and administrative expenses, including $2,700 depreciation: 1st quarter 2nd quarter Purchase of equipment (2nd quarter) Sale of equipment (1st quarter) Collections from clients: 50,100 69,900 58,000 11,900 1st quarter 2nd quarter 244,900 392,760 260 Interest on repayments (2nd quarter)Explanation / Answer
Answer:
Cash Budget For the Two Quarters Ending June 30, 2016 (Amount in $) Particulars 1 2 Total Beginning cash balance 30,500 19,800 50,300 Add: Total receipts Collection from clients 244,900 392,760 637,660 Sale of equipment 11,900 11,900 Interest from investments 7,400 7,400 Total receipts 256,800 400,160 656,960 Total available cash 287,300 419,960 707,260 Less: Total disbursements Professional salaries 140,500 140,400 280,900 Income tax expense 4,500 4,500 Selling and administrative expenses * 47,400 67,200 114,600 Purchase of equipment 58,000 58,000 Overhead 92,600 116,100 208,700 Total disbursements 280,500 386,200 666,700 Excess (Deficiency) of cash available over cash disbursements 6,800 33,760 40,560 Financing Add: Borrowing 13,000 13,000 Less: Repayments -13,700 -13,700 Interest -260 -260 Net cash from financing 13,000 -13,960 -960 Budgeted ending cash balance 19,800 19,800 39,600 Note : *As depreciation is a non - cash item, it cannot form part of the cash budget. It is assumed that depreciaiton amounting to $ 2,700 is provided separately for each quarter.