Accounting Question Part 2?

Question

Schaefer Company expects to have a cash balance of $46,000 on January 1, 2007. These are the relevant monthly budget data for the first two months of 2007.

1) Collections from customers: Jan. $70,000; Feb. $146,000.

2) Payments to suppliers: Jan. $40,000; Feb. $75,000.

3) Wages: Jan. $30,000; Feb. $40,000; Wages are paid in the month they are incurred.

4) Admin. expenses: Jan. $21,000; Feb. $28,000; These costs include depreciation of $1,000 per month. All other costs are paid as incurred.

5) Selling expenses: Jan. $15,000; Feb. $20,000. These costs are exclusive of depreciation. They are paid as incurred.

6) Sales of short-term investments in Jan. are expected to realize $12,000 in cash. Schaefer has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $20,000.

Instructions: Prepare a cash budget for Jan. and Feb.

**Please be sure to show work when possible.

Thanks!

Answer 1

Jan. 2007

Beg. cash bal. $46,000

Sale of investments $12,000

Collections from customers $70,000

Payments to suppliers ($40,000)

Wages ($30,000)

Admin. expenses ($20,000)

Selling expenses ($15,000)

Ending cash bal $23,000

Feb. 2007

Beg. cash bal. $23,000

Collections from customers $146,000

Bank loan $13,000

Payments to suppliers ($75,000)

Wages ($40,000)

Admin. expenses ($27,000)

Selling expenses ($20,000)

Ending cash bal $20,000