cash balance of $10,000 will be maintained throughout the cash budget perlod. Prepare a monthly cash budget for January and February and answer the following: How much surplus (or loan) is expected at the end of February? A. $1,900 B. $200 C. $1,400 D. $3,100 E. none of the other choices is correct
cash balance of $10,000 will be maintained throughout the cash budget perlod. Prepare a monthly cash budget for January and February and answer the following: How much surplus (or loan) is expected at the end of February? A. $1,900 B. $200 C. $1,400 D. $3,100 E. none of the other choices is correct
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter21: Budgeting
Section: Chapter Questions
Problem 9DQ: A. Discuss the purpose of the cash budget. B. If the cash for the first quarter of the fiscal year...
Related questions
Question
![cash balance of $10,000 will be maintained throughout the cash budget period. Prepare
a monthly cash budget for January and February and answer the following:
How much surplus (or loan) is expected at the end of February?
A $1,900
B. $200
C. $1,400
D. $3,100
E. none of the other choices is correct](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdf6d6eb5-9f4b-453d-a4cb-537821cd2f64%2F833f476d-d77b-4e6b-99c9-77306e0ea49a%2F8owbw4f_processed.jpeg&w=3840&q=75)
Transcribed Image Text:cash balance of $10,000 will be maintained throughout the cash budget period. Prepare
a monthly cash budget for January and February and answer the following:
How much surplus (or loan) is expected at the end of February?
A $1,900
B. $200
C. $1,400
D. $3,100
E. none of the other choices is correct
![The owner of Madison Pratt Designs is planning to request a line of credit from her
bank She has estimated the following sales forecasts for the firm for the following
months:
November
$30,000
December $24,000
January $19,000
February
$21,000
Collection of sales is expected to be as follows: 20% within the month of sale; 70% the
month following the sale; and 10% the second month following the sale. Total labor and
raw materials costs are expected to be incurred as follows:
November
$12,000
December $9,500
January $10,500
February $13,000
These labor and raw materials costs (above) are paid for the month after they are
incurred. Salaries cost the firm $4,000 per month; lease payments are $1000 per
month; depreciation charges are expected to be $600 per month; an income tax
payment of $900 will be made in January; and a payment of $1500 for advertising will
be made in February. Cash on hand on January 1st will amount to $2,000, and a target
cash balance of $10.000 will be maintained throughout the cash budget period. Prepare](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdf6d6eb5-9f4b-453d-a4cb-537821cd2f64%2F833f476d-d77b-4e6b-99c9-77306e0ea49a%2Fpu6jucn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The owner of Madison Pratt Designs is planning to request a line of credit from her
bank She has estimated the following sales forecasts for the firm for the following
months:
November
$30,000
December $24,000
January $19,000
February
$21,000
Collection of sales is expected to be as follows: 20% within the month of sale; 70% the
month following the sale; and 10% the second month following the sale. Total labor and
raw materials costs are expected to be incurred as follows:
November
$12,000
December $9,500
January $10,500
February $13,000
These labor and raw materials costs (above) are paid for the month after they are
incurred. Salaries cost the firm $4,000 per month; lease payments are $1000 per
month; depreciation charges are expected to be $600 per month; an income tax
payment of $900 will be made in January; and a payment of $1500 for advertising will
be made in February. Cash on hand on January 1st will amount to $2,000, and a target
cash balance of $10.000 will be maintained throughout the cash budget period. Prepare
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