Question 1 The controller of Trenshaw Company wants to improve the company\'s co

Question

Question 1 The controller of Trenshaw Company wants to improve the company's control system by preparing a month-by-month cash budget. The following information is for the month ending July 31, 2017. June 30, 2017, cash balance Dividends to be declared on July 15 Cash expenditures to be paid in July for operating expenses 38,000 Amortization expense in July Cash collections to be received in July Merchandise purchases to be paid in cash in July Equipment to be purchased for cash in July $40,600 12,300 4,500 Dividends are payable 30 days after declaration to shareholders of record on the declaration date Trenshaw Company wants to keep a minimum cash balance of $29,800

Explanation / Answer

Cash Budget: Beginning Balance 40600 Add: Cash Collections to be received 86400 Total Available Cash 127000 Less: Cash Payments Operating Expenses 38000 Merchandise Purchases 55000 Equipment Purchase 20400 Total Cash Payments 113400 Net Cash Available 13600 Add: Amount to be borrowed (Balancing figure) 16200 Minimum Cash Balance to be maintained 29800

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