Exercise 7-14 tvanhoe Company expects to have a cash balance of s63,000 on Janua

Question

Exercise 7-14 tvanhoe Company expects to have a cash balance of s63,000 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017 1. Collections from customers: January $88,000, February $163,000, 2. Payments to suppliers: January $57,000, February $92,000 3. Wages: January $31,560, February $41,560, wages are paid in the month they are incurred 4. Administrative expenses: January $22,560, February $25,560. These costs include depreciation of $1,000 per month. All other costs are paid as incurred. S, Selling expenses: January $16,560, February $21,560. These costs are exclusive of depreciation. They are paid as incurred 6. Sales of short-term investments in January are expected to realize $13,560 in cash. Ivanhoe Company 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 537,000. Prepare a cash budget for January and February IVANHOE COMPANY Cash Budget JanuaryFebruary dv

Explanation / Answer

IVANHOE COMPANY Cash Budget January February Beginning Cash balance $63,000.00 $37,880.00 Add : Cash Receipts - Collection from Customers $88,000.00 $163,000.00 - Sale of short term investment $13,560.00 Total Cash available $164,560.00 $200,880.00 Less : Cash Payments - Payment to suppliers $57,000.00 $92,000.00 - Wages $31,560.00 $41,560.00 - Administrative expenses $21,560.00 $24,560.00 - Selling Expenses $16,560.00 $21,560.00 Total Cash Payments $126,680.00 $179,680.00 Net Cash surplus / (deficit) $37,880.00 $21,200.00 Add : Borrowing / (Repayment) $0.00 $15,800.00 Ending Cash balance $37,880.00 $37,000.00

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