Jordan Medical Clinic has budgeted the following cash flows: JanuaryFebruary Mar
ID: 2568219 • Letter: J
Question
Jordan Medical Clinic has budgeted the following cash flows: JanuaryFebruary March Cash receipts Cash payments $109,000 $115,000 135,000 For inventory purchases For S&A; expenses 94,500 76,500 89,500 35,500 36,500 31,500 Jordan Medical had a cash balance of $12,500 on January 1. The company desires to maintain a cash cushion of $8,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month, the interest rate is 1 percent per month. Repayments may be made in any amount available. Jordan pays its vendors on the last day of the month also. The company had a monthly $40,000 beginning balance in its line of credit liability account from this year's quarterly results. Required Prepare a cash budget. (Round intermediate and final answers to the nearest whole dollar amounts. Any repayments/shortage should be indicated with a minus sign.) MarchExplanation / Answer
Cash Budget January February March Beginning balance 12,500.00 8,100.00 8,000.00 Add: Cash receipts 1,09,000.00 1,15,000.00 1,35,000.00 Cash available 1,21,500.00 1,23,100.00 1,43,000.00 Less: Cash payments For inventory purchase 94,500.00 76,500.00 89,500.00 For S&A expenses 35,500.00 36,500.00 31,500.00 Interest expenses per month 400.00 570.00 554.70 (40000*1%) ((40000+17000)*1%) ((40000+17000-1530)*1%) Total budgeted payments 1,30,400.00 1,13,570.00 1,21,554.70 Payments minus receipts -8,900.00 9,530.00 21,445.30 Surplus (shortage) Financing activity Borrowing (Repayment) 17,000.00 -1,530.00 -13,445.30 (8900+8000+100) (9530-8000) (21445.3-8000) Ending cash balance 8,100.00 8,000.00 8,000.00
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