Question

	Requirements
	1.	Prepare Daniels Consulting’s cash budget for January and February 2013.
	2.	How much cash will Daniels borrow in February if cash receipts from customers that month total $30,000 instead of $55,000?
		NOTE: Some cells that need to be completed have not been shaded green. You will have to work a little harder to determine what needs completed.
Solution:
	Requirement 1
	DANIELS CONSULTING, INC.
	Cash Budget
	For the Two Months Ended February 28, 2018
						January	February	Total
	Beginning Cash Balance
	Requirement 2
								February Revised
	Put narrative answer below
	Assume Daniels Consulting began January with $12,000 cash. Management forecasts that cash receipts from credit customers will be $52,000 in January and $55,000 in February. Projected cash payments include equipment purchases ($16,000 each month). Daniels's bank requires a $23,000 minimum balance in the firm's checking account. At the end of any month when the account balance falls below $23,000, the bank automatically extends credit to the firm in multiples of $5,000. Daniels borrows as little as possible and pays back loans each month in $1,000 increments, plus 12% interest on the entire unpaid principal. The first payment occurs one month after the loan.

Answer 1

1	DANIELS CONSULTING INC
	CASH BUDGET
	FOR THE TWO MONTHS ENDED FEBRUARY 28,2018
				JANUARY	FEBRUARY	TOTAL
	Beginning Cash Balance			$12,000	$48,000	$12,000
	Cash Receipts from customer			$52,000	$55,000	$107,000
	Total Cash Available			$64,000	$103,000	$119,000
	Less : Disbursements
	Purchase of Equipment			$16,000	$16,000	$32,000
	Net Cash Available			$48,000	$87,000	$87,000
	Ending Cash Balance			$48,000	$87,000	$87,000
	Since the ending cash balance for both year is more than $23000, there is no requirement for loan
2	DANIELS CONSULTING INC
	CASH BUDGET
	FOR THE TWO MONTHS ENDED FEBRUARY 28,2018
				JANUARY	FEBRUARY	TOTAL
	Beginning Cash Balance			$12,000	$48,000	$12,000
	Cash Receipts from customer			$52,000	$30,000	$82,000
	Total Cash Available			$64,000	$78,000	$94,000
	Less : Disbursements
	Purchase of Equipment			$16,000	$16,000	$32,000
	Net Cash Available			$48,000	$62,000	$62,000
	Ending Cash Balance			$48,000	$62,000	$62,000
	Since the ending cash balance for both year is more than $23000, there is no requirement for loan