Blue Spruce Corp prepares monthly cash budgets Here are rele

Blue Spruce Corp. prepares monthly cash budgets. Here are relevant data from operating budgets for 2017.

January February

Sales $360,700 $401,100

Purchases 121,500 131,400

Salaries 84,600 81,000

Administrative expenses 71,000 73,700

Selling expenses 79,000 86,900

All sales and purchases are on account. Budgeted collections and disbursement data are given below. All other expenses are paid in the month incurred except for administrative expenses, which include $1,200 of depreciation per month.

Other data.

1. Collections from customers: January $328,100;February $378,200.

2. Payments for purchases: January $111,400;

February $144,900.

3. Other receipts: January: collection of December 31, 2016, notes receivable $18,400; February: proceeds from sale of securities $5,500.

4. Other disbursements: February $13,000 cash dividend.

The company’s cash balance on January 1, 2017, is expected to be $47,400. The company wants to maintain a minimum cash balance of $45,910.

Prepare a cash budget for January and February.

Solution

Jan Feb Cash budget: Cash Balance Beginning 47400 49100 Cash collection from customer 328100 378200 Collection from Notes receivable 18400 Sales of securities 5500 Total Available cash 393900 432800 Less: Disbursement Purchase of inventory 111400 144900 Selling expense 79000 86900 Salaries 84600 81000 Admin expense 69800 72500 Dividend paid 13000 Total disbursement 344800 398300 Excess (Deficiency) 49100 34500 Financing: Borrowings 0 11410 Repayments including Interest 0 Total financing 0 11410 Cash Balance, ending 49100 45910