Question

QUESTION 33 Devon, CPA & Associates is a small, local firm in Cresent, Tennessee. The owner, Ryan Devon, is currently in the process of preparing the budget for the first two quarters in 2019. Ryan had an emergency meeting with a client and asked you to work on the cash budget while he is away. The master budget had been completed except for the cash budget Ryan left the information below for you: .Cash balance, January 1, 2019 . Required minimum cash balance desired Tax payments on estimated taxes (2nd Salaries per quarter Administrative expenses (includes $2,460 depreciation)-1st Administrative expenses (includes $2,460 depreciation)-2nd Qtr. Overhead costs-1t Qtr S 36,900 35,000 quarter only) 5,000 172,200 Qtr. 61.500 86,100 92,250 Overhead costs-2nd Qtr. . Collections from clients-1 Qtr Collections from clients-2nd Qtr Purchase of computer equipment-1t Qtr Sale of obsolete office equipment-2nd Qtr Investment income Mortgage Note payable (monthly) 123.000 282,900 30% greater than 15t Quarter $61,500 14,750 5,000 738 REQUIRED SHOW ALL COMPUTATIONS to earn full credit 1. Compute the following for the 1st Qtr a. What is the beginning cash balance? b. List ALL cash receipts and compute Total cash Receipts c Determine Total Available cash d List ALL disbursement and compute Total Cash Disbursements e. Determine the Excess (deficiency) of available cash f is there a need for financing? Explain g is there an opportunity to pay back previous months' borrowing? Explain h. Determine the Ending Cash balance 2. Compute the following for the 2nd Qtr Click Save amd Submit to save and submit. Click Save All Answers to save all answers. Save All A

Answer 1

Solution:

Part 1 –

a) Beginning cash balance 1^st qtr = $36,900

b) Cash receipts and total cash receipts

Cash Receipts (1st Quarter)	$$
Collections from client	282900
Investment Income	$5,000
Total Cash Receipts	$287,900

c) Total available Cash

Total available cash	$$
Beginning cash balance	$36,900
Plus: Total Cash receipts	$287,900
Total available cash	$324,800

d) Disbursement and total cash disbursement

Total Cash Disbursement (1st Qtr)	$$
Salaries per quarter	$172,200
Administrative expenses (excluding depreciation)	$59,040
Overhead costs	$92,250
Purchase of computer equipment	$61,500
Mortgage note payable (738*3)	$2,214
Total cash disbursements	$387,204

e)

Excess (deficiency) of available cash
Total cash available	$324,800
Less: Total cash disbursements	-$387,204
Deficiency of cash	-$62,404

f) Yes there is a need of financing. Since the available cash is less than estimated cash disbursements.

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