..ooo Verizon 10:51 AM 1 24%) edugen.wileyplus.com Exercise 7-14 Enright Company
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Question
..ooo Verizon 10:51 AM 1 24%) edugen.wileyplus.com Exercise 7-14 Enright Company expects to have a cash balance of $61,200 on January 1, 2014. These are the relevant monthly budget data for the first two months of 2014 t Collections from customers: January $86,200, February $161,200. 2Payments to suppliers: January $55,200, February $90,200. Wages: January $30,359, February $40,359. Wages are paid in the month C they are incurred. Administrative expenses: January $21,359, February $24,359. These costs include depreciation of $1,000 per month. All other costs are paid as incurred. s Selling expenses: January $15,359, February $20,359. These costs are exclusive of depreciation, They are paid as incurred. Sales of short-term investments in January are expected to realize $12,359 in cash. Enright 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 $35,200. Prepare a cash budget for January and February. Cash BudgetExplanation / Answer
Solution:
ENRIGHT COMPANY
Cash Budget
For the Two Months Ending February 28, 2014
January
February
Beginning Cash Balance
$61,200
$38,482
Add:
Collection from Customers
$86,200
$161,200
Sale Proceeds from Short term investments
$12,359
Total Available Cash before cash disbursements
$159,759
$199,682
Less:
Payment to Suppliers
$55,200
$90,200
Wages
$30,359
$40,359
Administrative Expenses
$20,359
$23,359
Selling Expenses
$15,359
$20,359
Total Cash Payments
$121,277
$174,277
Excess of Cash Receipt over cash payments
$38,482
$25,405
Minimum Monthly Cash Balance
$35,200
$35,200
Borrowing from local bank
$0
$9,795
Ending Cash Balance
$38,482
$35,200
ENRIGHT COMPANY
Cash Budget
For the Two Months Ending February 28, 2014
January
February
Beginning Cash Balance
$61,200
$38,482
Add:
Collection from Customers
$86,200
$161,200
Sale Proceeds from Short term investments
$12,359
Total Available Cash before cash disbursements
$159,759
$199,682
Less:
Payment to Suppliers
$55,200
$90,200
Wages
$30,359
$40,359
Administrative Expenses
$20,359
$23,359
Selling Expenses
$15,359
$20,359
Total Cash Payments
$121,277
$174,277
Excess of Cash Receipt over cash payments
$38,482
$25,405
Minimum Monthly Cash Balance
$35,200
$35,200
Borrowing from local bank
$0
$9,795
Ending Cash Balance
$38,482
$35,200
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