A firm is pareparing a summary cash budget for the first quarter of 2016. The fo
ID: 2454232 • Letter: A
Question
A firm is pareparing a summary cash budget for the first quarter of 2016. The following information regarding operating activities from the cash receipts and cash disbursements budgets are available:
January
February
March
Cash receipts
$15,000
$23,000
$34,000
Cash disbursements
13,000
26,000
30,000
The following information is also available:
•
The cash balance on January 1, 2016 was $10,000.
•
Equipment costing $4,000 will be purchased in February. A down payment of $1,000 will be made in February and payments of $1,000 will be made in each subsequent month thereafter.
•
Other payments in the amount of $5,000 will be paid in March.
What is the cash balance at the end of March expected to be?
January
February
March
Cash receipts
$15,000
$23,000
$34,000
Cash disbursements
13,000
26,000
30,000
Explanation / Answer
Cash budget
for the first quarter ended 2016
Particulars January February March
Opening cash balance 10000 12000 8000
add : cash receipts 15000 23000 34000
less: cash payments
cash disbursements (13000) (26000) (30000)
other cash payments (1000) (6000)
ending cash balance 12000 8000 6000.
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