Question

Cullumber Company expects to have a cash balance of $32,200 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2022.

1.		Collections from customers: January $49,700, February $102,200.
2.		Payments to suppliers: January $28,000, February $52,500.
3.		Wages: January $21,000, February $28,000. Wages are paid in the month they are incurred.
4.		Administrative expenses: January $14,700, February $16,800. These costs include depreciation of $700 per month. All other costs are paid as incurred.
5.		Selling expenses: January $10,500, February $14,000. These costs are exclusive of depreciation. They are paid as incurred.
6.		Sales of short-term investments in January are expected to realize $8,400 in cash. Cullumber Company has a line of credit at a local bank that enables it to borrow up to $17,500. The company wants to maintain a minimum monthly cash balance of $14,000.

Prepare a cash budget for January and February.

Answer 1

Cullumber Company
Cash Budget
For the Two months ended February 28, 2022
	January	February
Beginning Cash Balance	$                    32,200.00	$                16,800.00
Add: Cash receipts
Collection from customers	$                    49,700.00	$              102,200.00
Cash from sale of investment	$                      8,400.00
Total cash receipts	$                    58,100.00	$              102,200.00
Cash Availaible	$                    90,300.00	$              119,000.00
Less: Cash Payments
Payment to supplier	$                    28,000.00	$                52,500.00
Payment for wages	$                    21,000.00	$                28,000.00
Payment for administrative expenses (excluding dep.)	$                    14,000.00	$                16,100.00
Payment for Selling expenses	$                    10,500.00	$                14,000.00
Total Cash Payments	$                    73,500.00	$              110,600.00
Ending Cash Balance Before Financing	$                    16,800.00	$                  8,400.00
Financing
Borrowing	$                                -	$                  5,600.00
Repayments	$                                -
Ending Cash Balance	$                    16,800.00	$                14,000.00