Prepare Cash Budget For 3 Months Brewster Corporation expects the following cash

Question

Prepare Cash Budget For 3 Months Brewster Corporation expects the following cash receipts and disbursements during the first quarter of 2016 (receipts exclude new borrowings and disbursements exclude interest payments on borrowings since January 1, 2016) January February March Cash receipts $270,000 $290,000 $260,000 Cash disbursements 250,000 330,000 270,000 The expected cash balance at January 1, 2016, is $52,000. Brewster wants to maintain a cash balance at the end of each month of at least $50,000. Short-term borrowings at 1% interest per month will be used to accomplish this, if necessary. Borrowings (in multiples of $1,000) will be made at the beginning of the month in which they are needed, with interest for that month paid at the end of the month. Prepare a cash budget for the quarter ended March 31, 2016. Brewster Corporationn Cash Budget for the Quarter Ended March 31, 2016 January 52,000 270,000 V February March Beginning cash balance Cash receipts 290,000 V 260,000 V Short-term borrowings Cash available 322,000 Cash disbursements 250,000 V 330,000 V 270,000 V Interest payment Total cash disbursements Ending cash balance

Explanation / Answer

Answer:-

Brewster Corporation Cash Budget for the Quarter ended March 31,2016 Particluars January Febuary March $ $ $ Beginning cash balance 52000 72000 50810 Cash receipts 270000 290000 260000 Short term borrowings 0 19000 10000 Cash Avialable (A) 322000 381000 320810 Cash Disburshment 250000 330000 270000 Interest payments 0 190 100 Total cash disbursement (B) 250000 330190 270100 Closing cash balance C=(A-B) 72000 50810 50710

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