Question

You have the following information on your 2021 outdoor public swimming pool operation: Projected Cash Balance on May 31: $ 10,000 Projected sales (all collected in cash): June July August $ 45,000 $ 50,000 $ 55,000 Projected operating expenses: all paid in month following the month indicated: May $ 42,000 June $ 30,000 July $ 35,000 August $ 10,000 Additional monthly operating expenses: Depreciation $ 6,000 Planned locker room reconstruction (will pay cash): July $ 55,000 You have a policy of maintaining a minimum cash balance of $1,000 at the end of each month. If necessary, you will borrow (get a loan) at the beginning of the applicable month to maintain this balance All borrowings are in increments of $1,000. All repayments would be made at the end of the month in which the minimum balance can be met, after repayment of the loan and interest which is calculated at 1% per month Interest is not paid until the corresponding loan can be repaid. There will be no outstanding loans as of May 31. Based on the above information, PREPARE A CASH BUDGET for each of the calendar months of June and July (yes, just 2 months. Hint, set up two columns, one for each month)

Answer 1

The following is the Cash Budget for June and July 2021 for Swimming pool operations:

13000 50000 63000 For Outdoor Swiming Pool operation Cash Budget for June and July 2021 June July Beginning Cash Balance 10000 Add: Collections from Customers - Cash Sales 45000 Total Cash Available 55000 Less: Cash Disbursements: Operating Expenses 42000 Planned Locker Room reconstruction Total Cash Disbursements 42000 Excess / Deficiancy (-) of cash 13000 Financing: Borrowings 0 Repayments Interest Total Financing 0 Ending Cash Balance 13000 30000 55000 85000 - 22000 23000 0 0 23000 1000