FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Fayette Medical Clinic has budgeted the following cash flows.
February
$232,000
January
March
Cash receipts
Cash payments
For inventory purchases
For S&A expenses
$240,000
$272,000
220,000
62,000
164,000
64,000
190,000
54,000
Fayette Medical had a cash balance of $16,000 on January 1. The company desires to maintain a cash cushion of $10,000. Funds are
assumed to be borrowed, in increments of $2,000, 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. Fayette pays its vendors on the last day of the month also. The company had a
monthly $80,000 beginning balance in its line of credit liability account from this year's quarterly results.
Required
Prepare a cash budget. (Any repayments/shortage should be indicated with a minus sign. Round intermediate and final answers to
the nearest whole dollar amounts.)
X Answer is not complete.
Cash Budget
January
February
March
Section 1: Cash receipts
Beginning cash balance
16,000
$
10,200
13,030
Add: Cash receipts
240,000 O
232,000 O
272,000
Total cash available
256,000
242,200
285,030
Section 2: Cash payments
For inventory purchases
220,000
164,000
190,000
For S&A expenses
62,000
64,000
54,000
Interest expense per month
800 V
1,170 X
1,140 V
Total budgeted disbursements
282,800
229,170
245,140
Section 3: Financing activities
(26,800)
13,030
39,890
Borrowing (repayment)
37,000 X
Ending cash balance
10,200
$
13,030
$
39,890
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Transcribed Image Text:Fayette Medical Clinic has budgeted the following cash flows. February $232,000 January March Cash receipts Cash payments For inventory purchases For S&A expenses $240,000 $272,000 220,000 62,000 164,000 64,000 190,000 54,000 Fayette Medical had a cash balance of $16,000 on January 1. The company desires to maintain a cash cushion of $10,000. Funds are assumed to be borrowed, in increments of $2,000, 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. Fayette pays its vendors on the last day of the month also. The company had a monthly $80,000 beginning balance in its line of credit liability account from this year's quarterly results. Required Prepare a cash budget. (Any repayments/shortage should be indicated with a minus sign. Round intermediate and final answers to the nearest whole dollar amounts.) X Answer is not complete. Cash Budget January February March Section 1: Cash receipts Beginning cash balance 16,000 $ 10,200 13,030 Add: Cash receipts 240,000 O 232,000 O 272,000 Total cash available 256,000 242,200 285,030 Section 2: Cash payments For inventory purchases 220,000 164,000 190,000 For S&A expenses 62,000 64,000 54,000 Interest expense per month 800 V 1,170 X 1,140 V Total budgeted disbursements 282,800 229,170 245,140 Section 3: Financing activities (26,800) 13,030 39,890 Borrowing (repayment) 37,000 X Ending cash balance 10,200 $ 13,030 $ 39,890
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