Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Wildhorse Company expects to have a cash balance of $59,500 on January 1, 2017. These are the relevant monthly budget data for the first two
Wildhorse Company expects to have a cash balance of $59,500 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017.
1. | Collections from customers: January $84,500, February $159,500. | |
2. | Payments to suppliers: January $53,500, February $88,500. | |
3. | Wages: January $31,710, February $41,710. Wages are paid in the month they are incurred. | |
4. | Administrative expenses: January $22,710, February $25,710. These costs include depreciation of $1,000 per month. All other costs are paid as incurred. | |
5. | Selling expenses: January $16,710, February $21,710. These costs are exclusive of depreciation. They are paid as incurred. | |
6. | Sales of short-term investments in January are expected to realize $13,710 in cash. Wildhorse Company 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 $33,500. |
Prepare a cash budget for January and February.
Note: Could you please also explain the step on how to find the Beginning Cash Balance in February? Thank you and I appreciate your help.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started