Question

A company is preparing completing their Cash Budget. The following data has been prepared for cash receipts and payments.

	January	February	March
Cash receipts	$1,061,200	$1,182,400	$1,091,700
Cash payments	954,500	1,210,000	1,075,000

The company’s cash balance at January 1st is $290,000. This company desires a minimum cash balance of $340,000. What is the amount of excess cash or deficiency of cash (after considering the minimum cash balance required) for February?

Answer 1

Answer
	Particulars	January	February	March
	Opening balance	$            2,90,000	$       3,96,700	$            3,69,100
Add:	Cash Receipts	$          10,61,200	$     11,82,400	$          10,91,700
Less:	Cash Payments	$            9,54,500	$     12,10,000	$          10,75,000
a.	Ending cash balance	$            3,96,700	$       3,69,100	$            3,85,800
b.	Balance to be maintained	$            3,40,000	$       3,40,000	$            3,40,000
c.	Excess/(Shortage) a-b	$               56,700	$          29,100	$               45,800
Ans: Excess cash (after considering the minimum cash balance required) for March is $ 45800