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E5-14 Prepare a cash budget for two months. Rigley Company expects to have a cash balance of $46,000 on January 1, 2017. These are the
| E5-14 Prepare a cash budget for two months. | |||||||||||
| Rigley Company expects to have a cash balance of $46,000 on January 1, 2017. | |||||||||||
| These are the relevant monthly budget data for the first two months of 2017. | |||||||||||
| 1. | Collection from customers: January $71,000 and February $146,000. | ||||||||||
| 2. | Payments to suppliers: January $40,000, February $75,000. | ||||||||||
| 3. | Wages: January $30,000 and February $40,000. Wages are paid in the month | ||||||||||
| they are incurred. | |||||||||||
| 4. | Administrative expenses: January $21,000 and February $24,000. These costs | ||||||||||
| include depreciation of $1,000 per month. All other costs are paid as incurred. | |||||||||||
| 5. | Selling expenses: January $15,000 and February $20,000. These costs are exclusive | ||||||||||
| of depreciation. They are paid as incurred. | |||||||||||
| 6. | Sales of short-term investments in January are expected to realize $12,000 in | ||||||||||
| cash. Rigley has a line of credit at a local bank that enables it to borrow up | |||||||||||
| to $25,000. The company want to maintain a minimum monthly cash balance | |||||||||||
| of $20,000. | |||||||||||
| Instructions | |||||||||||
| Prepare a cash budget for January and February. | |||||||||||
| NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . | |||||||||||
| RIGLEY COMPANY | |||||||||||
| Cash Budget | |||||||||||
| For the Two Months Ending February 28, 2017 | |||||||||||
| January | February | ||||||||||
| Beginning cash balance | Value | Value | |||||||||
| Add: | Cash receipts | ||||||||||
| Collections from customers | Value | Value | |||||||||
| Sale of short-term investments | Value | Value | |||||||||
| Total receipts | ? | ? | |||||||||
| Total available cash | ? | ? | |||||||||
| Less: Cash disbursements | |||||||||||
| Payments to suppliers | Value | Value | |||||||||
| Wages | Value | Value | |||||||||
| Administrative expenses | Value | Value | |||||||||
| Selling expenses | Value | Value | |||||||||
| Total disbursements | ? | ? | |||||||||
| Excess (deficiency) of available cash over disbursements | ? | ? | |||||||||
| Financing | |||||||||||
| Add: Borrowings | Value | Value | |||||||||
| Less: Repayments | Value | Value | |||||||||
| Ending cash balance | ? | ? | |||||||||
| After you have completed E7-14, consider the following additional question | |||||||||||
| 1. | Assume that collection from customers and payment to suppliers in January changed to $80,000 | ||||||||||
| and $55,000 respectively. Show the impact of these changes on the Cash Budget. | |||||||||||
| SOLVE FOR MISSING VALUES AND ANSWER QUESTION 1 | |||||||||||
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