Question 1: Cash Budget

The following budget estimates have been prepared by Company:

Cash Receipts Cash Payments

May $120,000 $150,000

June 110,300 150,000

The company likes to maintain a minimum cash balance of $40,000.

Any excess cash is invested in a money market account earning 9% percent compounded monthly.Interest is reinvested in the money market account.Any cash deficiencies are covered by a withdrawal from the money market account.If additional cash is needed, the company has a line of credit at 12 percent interest with the local bank.Interest is paid monthly.

Assume a cash balance on May 1 of $40,000, a money market account balance of $0, and a credit line loan balance of $0.

Required:

Prepare cash budget for May and June.

Question 2: Cash Budget

Company provided the following information for the next year 2018:

Statements January February March Projected Cash Sales 150,000 200,000 250,000 Projected Credit Sales 100,000 220,000 260,000 Projected Cash Purchases 50,000 100,000 110,000 Projected Credit Purchases 80,000 150,000 180,000