Adams Medical Clinic has budgeted the following cash flows J

Adams Medical Clinic has budgeted the following cash flows: January February arch Cash receipts Cash payments $101,000 $107,000 $127,000 For inventory purchases For S&A; expenses 90,50072,500 85,500 31,500 32,500 27,500 Adams Medical had a cash balance of $8,500 on January 1. The company desires to maintain a cash cushion of $6,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 2 percent per month. Repayments may be made in any amount available. Adams 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.)

Solution

Jan Feb March Beginning Balance in cash 8500 6700 6000 Cash receipts from customer 101000 107000 127000 Cash available 109500 113700 133000 Less: Cash payments For inventory purchases 90500 72500 85500 For S& A expense 31500 32500 27500 Interest on Borrowed funds 800 1200 1170 Total budgeted payment 122800 106200 114170 payment minus reciepts Cash deficiency/ Surplus -13300 7500 18830 Financing Activity Borrowings/ (repayment) 20000 -1500 -12830 Ending balance 6700 6000 6000