Case Number 01

General Electric Company had cash of $14,000 on hand on January 1. During the year, the company expected the following cash collections from customers by quarter:

Cash collections

First 110,000

Second 177,500

Third 183,700

Fourth 136,000

Direct materials purchase in tons were budgeted as follows:

Direct materials purchase:

First 65,000

Second 75,000

Third 55,000

Fourth 50,000

The production budget showed the following unit production by quarter with an average labor rate of $40.00:

Units to be produced:

First 1,500

Second 2,000

Third 1,700

Fourth 1,500

General Electric Company planned to pay dividends of $10,000 per quarter during the year. During July, new equipment costing $60,000 will be purchased. An additional $16,000 was planned to installation costs during the fourth quarter.

The company was required to maintain a minimum cash balance of $15,000. A line of credit was available for short-term borrowings in increments of $1,000. All borrowings will be made at the beginning of a quarter and repaid at the end of a quarter. Interest on the short-term borrowings will be paid at 0.5% per quarter on the amount repaid in any quarter when a loan repayment is made. All other interest expense will be accrued each quarter.

Required: Prepare a cash budget by quarter and for the year in total.