ENRIGHT COMPANY Cash Budget For the Two Months Ending February 28, 2014 January

Question

ENRIGHT COMPANY
Cash Budget
For the Two Months Ending February 28, 2014 January February Exercise 7-14 Enright Company expects to have a cash balance of $57,200 on January 1, 2014. These are the relevant monthly budget data for the first two months of 2014.

1. Collections from customers: January $82,200, February $157,200. 2. Payments to suppliers: January $51,200, February $86,200. 3. Wages: January $30,296, February $40,296. Wages are paid in the month they are incurred. 4. Administrative expenses: January $21,296, February $24,296. These costs include depreciation of $1,000 per month. All other costs are paid as incurred. 5. Selling expenses: January $15,296, February $20,296. These costs are exclusive of depreciation. They are paid as incurred. 6. Sales of short-term investments in January are expected to realize $12,296 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 $31,200.
Prepare a cash budget for January and February.

ENRIGHT COMPANY
Cash Budget
For the Two Months Ending February 28, 2014 January February WagesSale of short-term investments FinancingEnding cash balanceCash receiptsExcess (deficiency) of available cash over disbursements Borrowings Repayments Collections from customersCash disbursementsPayments to suppliers Administrative expensesTotal receiptsSelling expensesBeginning cash balanceTotal available cashTotal disbursements $ $ Add: Payments to suppliers RepaymentsSelling expensesExcess (deficiency) of available cash over disbursements Borrowings Administrative expenses FinancingCash disbursementsEnding cash balance Collections from customersSale of short-term investmentsBeginning cash balanceTotal receiptsCash receipts WagesTotal available cashTotal disbursements Total receiptsExcess (deficiency) of available cash over disbursementsSale of short-term investmentsCash disbursements Administrative expenses FinancingSelling expenses Borrowings WagesCash receipts Collections from customersPayments to suppliersTotal available cash RepaymentsTotal disbursementsBeginning cash balanceEnding cash balance Ending cash balancePayments to suppliersCash receipts BorrowingsCash disbursements WagesTotal disbursements RepaymentsTotal available cash Administrative expensesSelling expensesExcess (deficiency) of available cash over disbursementsBeginning cash balance FinancingTotal receipts Collections from customersSale of short-term investments Total disbursements Wages FinancingTotal receiptsTotal available cashPayments to suppliersCash receiptsSale of short-term investments Administrative expensesSelling expensesExcess (deficiency) of available cash over disbursements BorrowingsEnding cash balance Collections from customersCash disbursements RepaymentsBeginning cash balance Beginning cash balancePayments to suppliers WagesTotal disbursementsSale of short-term investments Collections from customers Administrative expenses Financing BorrowingsCash disbursementsTotal receiptsSelling expenses RepaymentsExcess (deficiency) of available cash over disbursementsCash receiptsTotal available cashEnding cash balance Less: Sale of short-term investmentsCash disbursementsPayments to suppliersExcess (deficiency) of available cash over disbursements Borrowings RepaymentsTotal disbursementsBeginning cash balanceCash receipts Wages FinancingTotal receipts Administrative expensesTotal available cashSelling expensesEnding cash balance Collections from customers Administrative expensesCash receiptsPayments to suppliersTotal disbursements FinancingSelling expenses RepaymentsExcess (deficiency) of available cash over disbursements WagesEnding cash balanceTotal receipts Collections from customersCash disbursements BorrowingsBeginning cash balanceTotal available cashSale of short-term investments Total disbursementsBeginning cash balanceSelling expenses BorrowingsTotal receiptsPayments to suppliers FinancingExcess (deficiency) of available cash over disbursementsCash disbursements RepaymentsTotal available cashEnding cash balanceCash receipts Administrative expensesSale of short-term investments Collections from customers Wages WagesSale of short-term investments BorrowingsPayments to suppliersCash disbursements Administrative expensesSelling expensesTotal receipts Collections from customers RepaymentsTotal available cashTotal disbursementsExcess (deficiency) of available cash over disbursementsBeginning cash balance FinancingEnding cash balanceCash receipts Ending cash balanceTotal disbursements Administrative expensesCash receipts Collections from customers WagesSelling expenses BorrowingsExcess (deficiency) of available cash over disbursements RepaymentsBeginning cash balanceSale of short-term investmentsTotal receipts FinancingTotal available cashCash disbursementsPayments to suppliers Cash receiptsExcess (deficiency) of available cash over disbursementsTotal disbursements FinancingEnding cash balance Borrowings Collections from customersSale of short-term investmentsCash disbursementsPayments to suppliers Wages Administrative expensesSelling expenses RepaymentsBeginning cash balanceTotal receiptsTotal available cash Payments to suppliersSale of short-term investmentsSelling expensesTotal available cashBeginning cash balanceTotal disbursements Financing Collections from customersExcess (deficiency) of available cash over disbursements Borrowings Wages Administrative expenses RepaymentsTotal receiptsCash disbursementsCash receiptsEnding cash balance Administrative expenses Borrowings FinancingPayments to suppliersSelling expensesExcess (deficiency) of available cash over disbursementsTotal disbursements RepaymentsBeginning cash balanceEnding cash balanceSale of short-term investmentsTotal receiptsTotal available cash WagesCash receipts Collections from customersCash disbursements Add: Ending cash balanceTotal receiptsTotal disbursementsSelling expensesSale of short-term investments Collections from customersPayments to suppliersCash receiptsTotal available cash Financing Repayments Administrative expenses WagesCash disbursementsExcess (deficiency) of available cash over disbursements BorrowingsBeginning cash balance Less: Total receipts Collections from customersEnding cash balancePayments to suppliersCash disbursements FinancingSale of short-term investmentsCash receipts Wages Administrative expensesExcess (deficiency) of available cash over disbursements BorrowingsSelling expenses RepaymentsBeginning cash balanceTotal available cashTotal disbursements Payments to suppliersSelling expenses BorrowingsTotal available cashCash receiptsExcess (deficiency) of available cash over disbursementsBeginning cash balanceTotal receiptsTotal disbursements Financing RepaymentsEnding cash balance Collections from customersCash disbursementsSale of short-term investments Wages Administrative expenses $ $

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Notes:

1) Administrative Expenses for both the months would'nt include 1000 (Depreciation Expense) as depreciation is a non-cash expense.

2) The company will have to borrow $9480 (31200 - 21720) in the month of February 2014 to meet its monthly cash balance requirement of $31200.

January February Beginning Cash Balance 57200 34608 Add Cash Receipts

Collections from Customers 82200 157200 Sale of Short Term Investments 12296 0 Total Receipts 94496 157200 Total Available Cash 151696 191808


Less Cash Disbursements

Wages 30296 40296 Payments to Suppliers 51200 86200 Administrative Expenses 20296 23296 Selling Expenses 15296 20296 Total Disbursements 117088 170088


Excess (Deficiency) of Available Cash Over Disbursements 34608 21720 Add Borrowings 0 9480 Less Repayments 0 0 Ending Cash Balance 34608 31200

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