Question

Some Company
Cash Budget Given Information
For theYear Ended December 31, 2020
Some Company has asked you to prepare a cash budget for the year 2020 using the following information:
Projected cash balance at January 1	50,000
Cash balance desired December 31	65,000
Projected sales by quarter (collected 70% in the quarter of sale and 20% in the quarter after sale, with the remaining 10% uncollectible):
Accounts recievable from 4th quarter 2019 (of which 20,000 is collectible and 10,000 is uncollectible)	30,000
Sales Quarter 1	145,000
Sales Quarter 2	250,000
Sales Quarter 3	160,000
Sales Quarter 4	240,000
Projected 2020 sale of excess land:
Original cost	40,000
Accumulated depreciation	0
Book value	40,000
Cash expected to be received	75,000
Gain on sale expected	35,000
Expected federal income tax refund from 2020 correction of error on 2018 tax return	14,000
Projected 2020 transactions, to be paid in 2020, unless otherwise noted:
Purchases of merchandise inventory	410,000
Operating expenses:
Sales and office salaries	121,000
Office utilities	9,000
Insurance expense (taken from Prepaid Insurance)	6,500
Depreciation of building and equipment	55,000
Amortization of copyright	15,000
Purchases of office equipment	20,000
Cash dividend (declared in December 2020; to be paid in January 2021	28,000
The company has a line of credit at the bank which allows borrowing up to $500,000. Currently, the company has loans of $250,000 taken out two years ago at 10% interest. Interest is due quarterly on March 31, June 30, September 30 and December 31.

The amounts are listed in the above problem; "Some Company has asked you to prepare a cash budget for the year 2020 using the following information"

Answer 1