cost Management

Problem 3 1 The controller of Rise Coffee House (RCH) Company wishes to improve the companys control system by preparing a month-by-month cash budget. The following information relates to the month ending July 31, 2020 June 30, 2020 cash balance $ 45,000 Dividends to be declared on July 15 $ 12,000 Cash expenditures to be paid in July for operating expenses $ 36,800 Amortization expense in July $ 4,500 Cash colections to be received in July $ 89,000 Merchandise purchases to be paid in cash in July $ 56,200 Equipment to be purchased for cash in July $ 20,500 RCH Company wishes to maintain a minimum cash balance of $25,000 Dividends are payable to shareholders of record on declaration date, 30 days after declaration Required (8 marks) a Prepare a cash budget for the month ended July 31, 2020, and indicate how much, if anything. RCH will need to borrow to meet its minimum cash requirement (6 marks) b. Explain how cash budgeting can reduce the cost of short-term borrowing. (2 marks) 0