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Pletcher Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is...

Pletcher Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is currently preparing the master budget for the first 2 quarters of 2020. All that remains in this process is the cash budget. The following information has been collected from other portions of the master budget and elsewhere.

Beginning cash balance $32,400
Required minimum cash balance 27,000
Payment of income taxes (2nd quarter) 4,320
Professional salaries:
    1st quarter 151,200
    2nd quarter 151,200
Interest from investments (2nd quarter) 7,560
Overhead costs:
    1st quarter 83,160
    2nd quarter 108,000
Selling and administrative costs, including
$2,160 depreciation:
    1st quarter 54,000
    2nd quarter 75,600
Purchase of equipment (2nd quarter) 54,000
Sale of equipment (1st quarter) 12,960
Collections from clients:
    1st quarter 253,800
    2nd quarter 410,400
Interest payments (2nd quarter) 216


Prepare a cash budget for each of the first two quarters of 2020

Solutions

Expert Solution

Pletcher Dental clinic
Cash budget
Quarter
1 2 Six months
Opening cash 32400 27000 32400
Add:- Cash receipts
Collection from clients 253800 410400 664200
Interest from Investments 7560 7560
Sale of equipment 12960 12960
Total Cash collections 266760 417960 684720
Total Available cash 299160 444960 717120
Less:- cash disbursements
Income tax payment 4320 4320
Professional salaries 151200 151200 302400
OH costs 83160 108000 191160
Selling and adm. Costs ( excluding dep. ) 51840 73440 125280
Purchase of equipment 54000 54000
Total cash disbursements 286200 390960 677160
Excess / deficit 12960 54000 39960
Financing:-
Add:- borrowings 14040 14040
Less:- Repayment (including intt.) 14256 14256
Ending cash balance 27000 39744 39744
Repayment (including intt.) = 14040 + 216 = 14256

ekkarill92 answered 3 years ago
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