SOLVE FOR MISSING VALUES AND ANSWER QUESTION 1 E5-14 Prepare a cash budget for t
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Question
SOLVE FOR MISSING VALUES AND ANSWER QUESTION 1
E5-14 Prepare a cash budget for two months. Rigley Company expects to have a cash balance of $46,000 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017. 1. Collection from customers: January $71,000 and February $146,000. 2. Payments to suppliers: January $40,000, February $75,000. 3. Wages: January $30,000 and February $40,000. Wages are paid in the month they are incurred. 4. Administrative expenses: January $21,000 and February $24,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred. 5. Selling expenses: January $15,000 and February $20,000. These costs are exclusive of depreciation. They are paid as incurred. 6. Sales of short-term investments in January are expected to realize $12,000 in cash. Rigley has a line of credit at a local bank that enables it to borrow up to $25,000. The company want to maintain a minimum monthly cash balance of $20,000. Instructions Prepare a cash budget for January and February. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . RIGLEY COMPANY Cash Budget For the Two Months Ending February 28, 2017 January February Beginning cash balance Value Value Add: Cash receipts Collections from customers Value Value Sale of short-term investments Value Value Total receipts ? ? Total available cash ? ? Less: Cash disbursements Payments to suppliers Value Value Wages Value Value Administrative expenses Value Value Selling expenses Value Value Total disbursements ? ? Excess (deficiency) of available cash over disbursements ? ? Financing Add: Borrowings Value Value Less: Repayments Value Value Ending cash balance ? ? After you have completed E7-14, consider the following additional question 1. Assume that collection from customers and payment to suppliers in January changed to $80,000 and $55,000 respectively. Show the impact of these changes on the Cash Budget.SOLVE FOR MISSING VALUES AND ANSWER QUESTION 1
Explanation / Answer
Rigley Company
Cash budget for two months January and February:
Rigley Company
Cash Budget
for the two months - January and February
January
February
Beginning Cash balance
$46,000
$24,000
Add: Cash receipts
collections from customers
$71,000
$146,000
Sale of short term investments
$12,000
0
Total receipts
$83,000
$146,000
Available cash
$129,000
$174,000
Less: Disbursements:
Payment to suppliers
$40,000
$75,000
Wages
$30,000
40,000
Administrative expenses
$20,000
$23,000
selling and administrative expenses
$15,000
$20,000
Total disbursements
$105,000
$158,000
Excess/(deficiency) of available cash over disbursements
$24,000
$16,000
minimum balance
$20,000
$20,000
Financing -
Add: Borrowings
$4,000
Less: Repayments
Ending cash balance
$24,000
$20,000
Note:
Impact of changes in collections from customers and payment to suppliers in the month of January on Cash budget:
Rigley Company
Cash Budget
for the two months - January and February
January
February
Beginning Cash balance
$46,000
$20,000
Add: Cash receipts
collections from customers
$80,000
$146,000
Sale of short term investments
$12,000
0
Total receipts
$92,000
$146,000
Available cash
$138,000
$166,000
Less: Disbursements:
Payment to suppliers
$55,000
$75,000
Wages
$30,000
40,000
Administrative expenses
$20,000
$23,000
selling and administrative expenses
$15,000
$20,000
Total disbursements
$120,000
$158,000
Excess/(deficiency) of available cash over disbursements
$18,000
$8,000
minimum balance
$20,000
$20,000
Financing -
Add: Borrowings
$2,000
$12,000
Less: Repayments
Ending cash balance
$20,000
$20,000
Note:
Rigley Company
Cash Budget
for the two months - January and February
January
February
Beginning Cash balance
$46,000
$24,000
Add: Cash receipts
collections from customers
$71,000
$146,000
Sale of short term investments
$12,000
0
Total receipts
$83,000
$146,000
Available cash
$129,000
$174,000
Less: Disbursements:
Payment to suppliers
$40,000
$75,000
Wages
$30,000
40,000
Administrative expenses
$20,000
$23,000
selling and administrative expenses
$15,000
$20,000
Total disbursements
$105,000
$158,000
Excess/(deficiency) of available cash over disbursements
$24,000
$16,000
minimum balance
$20,000
$20,000
Financing -
Add: Borrowings
$4,000
Less: Repayments
Ending cash balance
$24,000
$20,000
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