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Cullumber Company expects to have a cash balance of $61,650 on January 1, 2017. These are the relevant monthly budget data for the first two
Cullumber Company expects to have a cash balance of $61,650 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017.
1. | Collections from customers: January $86,650, February $161,650. | |
2. | Payments to suppliers: January $55,650, February $90,650. | |
3. | Wages: January $30,490, February $40,490. Wages are paid in the month they are incurred. | |
4. | Administrative expenses: January $21,490, February $24,490. These costs include depreciation of $1,000 per month. All other costs are paid as incurred. | |
5. | Selling expenses: January $15,490, February $20,490. These costs are exclusive of depreciation. They are paid as incurred. | |
6. | Sales of short-term investments in January are expected to realize $12,490 in cash. Cullumber Company 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 $35,650. |
Prepare a cash budget for January and February.
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