Enright Company expects to have a cash balance of $60,990 on January 1, 2014. Th
ID: 2444869 • Letter: E
Question
Enright Company expects to have a cash balance of $60,990 on January 1, 2014. These are the relevant monthly budget data for the first two months of 2014.
Administrative expenses: January $21,149, February $24,149. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
1. Collections from customers: January $85,990, February $160,990. 2. Payments to suppliers: January $54,990, February $89,990. 3. Wages: January $30,149, February $40,149. Wages are paid in the month they are incurred. 4.Administrative expenses: January $21,149, February $24,149. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $15,149, February $20,149. These costs are exclusive of depreciation. They are paid as incurred. 6. Sales of short-term investments in January are expected to realize $12,149 in cash. Enright has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $34,990.Explanation / Answer
Cash Budget Particulars January February Opening Balance 60990 34990 Cash Receipts Collection From customers 85990 160990 Realised from sale of short term investments 12149 0 Total Cash available For disbursement 159129 195980 Closing Balance to be maintained 34990 34990 Net cash Available For Disbursement 124139 160990 Payment To suppliers 54990 89990 Wages 30149 40149 Administrative expenses 20149 24149 Selling Expenses 15149 20149 Cash surplus or excess after disbursement 3702 -13447 Borrowing From Bank 0 13447
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