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Devon, CPA & Associates is a small, local firm in Cresent, Tennessee. The owner, Ryan Devon, is currently in the process of preparing the budget
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 2016. 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, 2018 $36, 900 Required minimum cash balance desired 35,000 Tax payments on estimated taxes (2^nd quarter only) 5,000 Salaries per quarter 172.200 Administrative expenses (includes $2, 450 deprecation)-1^st Qtr. 61, 500 Administrative expenses (includes $2, 460 deprecation)-2^nd Qtr. 86, 100 Overhead costs-1^st Qtr. 92, 250 Overhead costs-2^nd Qtr. 123,000 Collections from clients-1^st Qtr. 282, 900 Collections from clients-2^nd Qtr. 30% greater than 1^st Quarter Purchase of computer equipment-1^st Qtr $61, 500 Sale of obsolete office equipment-2^nd Qtr 14, 750 Investment income 5,000 Mortgage Note payable (monthly) 738 REQUIRED: Prepare a cash budget for the first two quarter of 2018. Show ALL supportive computations Discuss the result, including whether a loan is required in either or both quarters If a loan is required, what do you recommend Ryan do to reduce the need to borrow? BE SPECIFIC
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