Question

Question 12 Sherdan Company expects to have a cash balance of $57,800 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2017. 1. Collections from customers: January $84,900, February $131,100 2. Payments to suppliers: January $49, 300, February $51,700 3. Wages: January $35,700, February $41,700. Wages are paid in the month they are incurred. 4. Administrative expenses: January $25,700, February $34,700. These costs include depreciation of $2,500 per month. All other costs are paid as incurred, 5. Selling expenses: January $17,600, February $20,300. These costs are exclusive of depreciation. They are paid as incurred. 6. Sales of short-term investments in January are expected to realize $14,600 in cash. Sheridan has a line of credit at a local bank that enables it to borrow up to $40,400. The company wants to maintain a minimum monthly cash balance of $26,000.

Answer 1

Solution : - Cash Budget 1 January February $ 57,800 $ 31,500 Beginning Cash Balance Add: Receipts it Colloction from Customery Sale of short term investment a Total receipts 1.84,900 1,31,000 4.600) 99,500 1,31,000 Total Available cash 157,300 | 162,500 less: Disbursements: Payment to suppliers nou l. 49,300 1 51.700 cooper a ti 35,700 41,700 Admin Exponses ondoor 23,200 32,200 Selling exp 19,600 20.300 3 Total Disbursements 125, son 1 145, 900 Excess (Deficiency of Auculable" 31,500 | 16,600 cash over disbursements are I financing izo Borrowing R o om - 1:9400 Repayment censing cash balance 1 $ 31,500 $ 26,000 canned with CamScanner