If someone can explain how to get the blanks, I would appreciate it. Newman Medi

Question

If someone can explain how to get the blanks, I would appreciate it.

Newman Medical Clinic has budgeted the following cash flows. Newman Medical had a cash balance of $15.500 on January 1. The company desires to maintain a cash cushion of $8.000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month: the interest rate is 1 percent per month. Repayments may be made in any amount available. Newman 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 this year's quarterly results. Prepare a cash budget (Any repayments/shortage should be indicated with a minus sign. Round your answers to the nearest whole dollar amount.)

Explanation / Answer

Cash Budget:

Simply follow the cash budget monthwise. You should not find much difficulty in comprehending the steps. In case you do, please raise a query by posting a comment.

January February March Beginning cash balance 15,500 8,100 8,000 Add cash receipt 115,000 121,000 141,000 Cash available 130,500 129,100 149,000 Less Cash payments For S& A expenses 38,500 39,500 34,500 For inventory purchases 97,500 79,500 92,500 For interest expense 400 540 524 Total budgeted payments 136,400 119,540 127,524 Surplus / (shortage) (5,900) 9,560 21,476 Financing activity Borrowing / (repayment) 14,000 (1,560) 12,440 Ending cash balance 8,100 8,000 9,036

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