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Exercise 21-19 Pletcher Dental Clinic is a medium-sized dental service specializing in family dental care. The...

Exercise 21-19 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 2017. 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 $41,460 Required minimum cash balance 34,550 Payment of income taxes (2nd quarter) 5,528 Professional salaries: 1st quarter 193,480 2nd quarter 193,480 Interest from investments (2nd quarter) 9,674 Overhead costs: 1st quarter 106,414 2nd quarter 138,200 Selling and administrative costs, including $2,764 depreciation: 1st quarter 69,100 2nd quarter 96,740 Purchase of equipment (2nd quarter) 69,100 Sale of equipment (1st quarter) 16,584 Collections from clients: 1st quarter 324,770 2nd quarter 525,160 Interest payments (2nd quarter) 276 Prepare a cash budget for each of the first two quarters of 2017. (Do not leave any answer field blank. Enter 0 for amounts.) PLETCHER DENTAL CLINIC Cash Budget 1st Quarter 2nd Quarter $ $ : : : : $ $

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Expert Solution

Cash Budget:
Quarter 1 Quarter 2
A Beginning Cash Balance $41,460 $34,550
Cash Receipts
   Collections from Clients $324,770 $525,160
   Interest from Investments $0 $9,674
   Sale of Equipment $16,584 $0
   
B Total Cash Receipts $341,354 $534,834
Cash Payments
   Income Taxes $0 $5,528
   Professional Salaries $193,480 $193,480
   Overhead Costs $106,414 $138,200
   Selling and Administration Costs $66,336 $93,976
   Purchase of Equipment $0 $69,100
   Interest Payments $0 $276
C Total Cash Payments $366,230 $500,560
D Excess of Cash Receipts over Cash Payments (A+B-C) $16,584 $68,824
E Borrowings (F-D) $17,966 $0
F Ending Cash Balance (D or $34,550, whichever is higher) $34,550 $68,824

Since data is not provided regarding how the minimum balance to be maintained, i have taken it as borrowings. As the data is silent about borrowings, i did not consider anything about interest on borrowings or repayment of borrowings in the second quarter.

ekkarill92 answered 1 year ago
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