Exercise 7-14

Enright Company expects to have a cash balance of $63,480 on January 1, 2014. These are the relevant monthly budget data for the first two months of 2014.

1.		Collections from customers: January $88,480, February $163,480.
2.		Payments to suppliers: January $57,480, February $92,480.
3.		Wages: January $30,374, February $40,374. Wages are paid in the month they are incurred.
4.		Administrative expenses: January $21,374, February $24,374. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5.		Selling expenses: January $15,374, February $20,374. These costs are exclusive of depreciation. They are paid as incurred.
6.		Sales of short-term investments in January are expected to realize $12,374 in cash. Enright 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 $37,480.

Prepare a cash budget for January and February.