Problem 14-20A (Algo) Preparing a cash budget LO 14-5

Fanning Medical Clinic has budgeted the following cash flows.

	January			February			March
Cash receipts	$	105,000		$	111,000		$	131,000
Cash payments
For inventory purchases		92,500			74,500			87,500
For S&A expenses		33,500			34,500			29,500

Fanning Medical had a cash balance of $10,500 on January 1. The company desires to maintain a cash cushion of $10,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 3 percent per month. Repayments may be made in any amount available. Fanning pays its vendors on the last day of the month also. The company had a monthly $40,000 beginning balance in its line of credit liability account from last years quarterly results.

Required

Prepare a cash budget. (Round intermediate and final answers to the nearest whole dollar amounts. Any repayments should be indicated with a minus sign.)

Check my work Problem 14-20A (Algo) Preparing a cash budget LO 14-5 Fanning Medical Clinic has budgeted the following cash flows. February $ 111,000 March $ 131,000 January Cash receipts $ 105,000 Cash payments For inventory purchases 92,500 For S&A expenses 33,500 74,500 34,500 87,500 29,500 Fanning Medical had a cash balance of $10,500 on January 1. The company desires to maintain a cash cushion of $10,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 3 percent per month. Repayments may be made in any amount available. Fanning pays its vendors on the last day of the month also. The company had a monthly $40,000 beginning balance in its line of credit liability account from last year's quarterly results. Required Prepare a cash budget. (Round intermediate and final answers to the nearest whole dollar amounts. Any repayments should be indicated with a minus sign.) January February March $ $ (11,700) $ (120,700) Cash Budget Section 1: Cash Receipts Beginning cash balance Add: Cash receipts Total cash available Section 2: Cash Payments For inventory purchases For S&A expenses Interest expense per month 10,500 105,000 115,500 (11,700) (120,700) 92,500 33,500 1,200 74,500 34,500 87,500 29,500 127,200 109,000 117,000 Total budgeted disbursements Section 3: Financing Activities Surplus (shortage) Borrowing (repayment) Ending cash balance (11,700) (120,700) (237,700) $ (11,700) $ (120,700) $ (237,700)