..ooo Verizon 10:51 AM 1 24%) edugen.wileyplus.com Exercise 7-14 Enright Company
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..ooo Verizon 10:51 AM 1 24%) edugen.wileyplus.com Exercise 7-14 Enright Company expects to have a cash balance of $61,200 on January 1, 2014. These are the relevant monthly budget data for the first two months of 2014 t Collections from customers: January $86,200, February $161,200. 2Payments to suppliers: January $55,200, February $90,200. Wages: January $30,359, February $40,359. Wages are paid in the month C they are incurred. Administrative expenses: January $21,359, February $24,359. These costs include depreciation of $1,000 per month. All other costs are paid as incurred. s Selling expenses: January $15,359, February $20,359. These costs are exclusive of depreciation, They are paid as incurred. Sales of short-term investments in January are expected to realize $12,359 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 $35,200. Prepare a cash budget for January and February. Cash BudgetExplanation / Answer
Cash Budget of Enright Company for January and February
ENRIGHT COMPANY
Cash Budget
For the Two Months Ending Feb 28,2014
January ($) February($)
Opening Cash Balance 61,200 38,482
Add:
Collection From Customers 86,200 161,200
Sale of Investments 12,359 0
Total Available Cash 159,759 199,682
Less:
Payments to Suppliers 55,200 90,200
Wages 30,359 40,359
Administration Expenses* 20,359 23,359
Selling Expenses 15,359 20,359
Total Disbursements 121,277 174,277
Excess of Available Cash over Disbursements 38,482 25,405
Add: Borrowings 0 9,795**
Closing Cash Balance 38,482 35,200
Note:
*Administration Expenses are net of depreciation (as no outflow of cash took place)
** Min closing cash balance must be $35,200, February cash bal is falling short of $9,795, therefore, Enright Company will borrow this amount.
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