Question
Sandhill Company expects to have a cash balance of $69,000 on January 1, 2020. These are the relevant monthly budget data for the first two
Sandhill Company expects to have a cash balance of $69,000 on January 1, 2020. These are the relevant monthly budget data for the first two months of 2020.
1. |
| Collections from customers: January $106,500, February $219,000. |
2. |
| Payments to suppliers: January $60,000, February $112,500. |
3. |
| Wages: January $45,000, February $60,000. Wages are paid in the month they are incurred. |
4. |
| Administrative expenses: January $31,500, February $36,000. These costs include depreciation of $1,500 per month. All other costs are paid as incurred. |
5. |
| Selling expenses: January $22,500, February $30,000. These costs are exclusive of depreciation. They are paid as incurred. |
6. |
| Sales of short-term investments in January are expected to realize $18,000 in cash. Sandhill Company has a line of credit at a local bank that enables it to borrow up to $37,500. The.company wants to maintain a minimum monthly cash balance of $30,000. |
Prepare a cash budget for January and February. Show all your work for partial credits in your uploaded file. List items that increase cash balance first.
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