Exercise 21-19 Pletcher Dental Clinic is a medium-sized dental service specializ
ID: 2542610 • Letter: E
Question
Exercise 21-19
Pletcher Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is currently preparing the master budget for the first 2 quarters of 2017. All that remains in this process is the cash budget. The following information has been collected from other portions of the master budget and elsewhere.
Prepare a cash budget for each of the first two quarters of 2017. (Do not leave any answer field blank. Enter 0 for amounts.)
1st Quarter
2nd Quarter
Beginning cash balance $32,430 Required minimum cash balance 27,025 Payment of income taxes (2nd quarter) 4,324 Professional salaries: 1st quarter 151,340 2nd quarter 151,340 Interest from investments (2nd quarter) 7,567 Overhead costs: 1st quarter 83,237 2nd quarter 108,100 Selling and administrative costs, including $2,162 depreciation: 1st quarter 54,050 2nd quarter 75,670 Purchase of equipment (2nd quarter) 54,050 Sale of equipment (1st quarter) 12,972 Collections from clients: 1st quarter 254,035 2nd quarter 410,780 Interest payments (2nd quarter) 216Explanation / Answer
Answer
1st Quarter
2nd Quarter
Beginning cash balance
$ 32,430.00
$ 27,025.00
Add
Investment interest
$ 7,567.00
Sale of Equipment
$ 12,972.00
Collection from clients
$ 2,54,035.00
$ 4,10,780.00
Total cash available
$ 2,99,437.00
$ 4,45,372.00
Less:
Payment of income taxes
$ 4,324.00
Professional salaries
$ 1,51,340.00
$ 1,51,340.00
Overhead costs
$ 83,237.00
$ 1,08,100.00
Selling & administrative cost (less depreciation)
$ 51,888.00
$ 73,508.00
Equipment purchased
$ 54,050.00
Total cash disbursement
$ 2,86,465.00
$ 3,91,322.00
Excess of available cash over disbursement
$ 12,972.00
$ 54,050.00
Add
Borrowings
$ 14,053.00
Less
Repayments
$ 14,053.00
Interest
$ 216.00
Ending cash balance
$ 27,025.00
$ 39,781.00
1st Quarter
2nd Quarter
Beginning cash balance
$ 32,430.00
$ 27,025.00
Add
Investment interest
$ 7,567.00
Sale of Equipment
$ 12,972.00
Collection from clients
$ 2,54,035.00
$ 4,10,780.00
Total cash available
$ 2,99,437.00
$ 4,45,372.00
Less:
Payment of income taxes
$ 4,324.00
Professional salaries
$ 1,51,340.00
$ 1,51,340.00
Overhead costs
$ 83,237.00
$ 1,08,100.00
Selling & administrative cost (less depreciation)
$ 51,888.00
$ 73,508.00
Equipment purchased
$ 54,050.00
Total cash disbursement
$ 2,86,465.00
$ 3,91,322.00
Excess of available cash over disbursement
$ 12,972.00
$ 54,050.00
Add
Borrowings
$ 14,053.00
Less
Repayments
$ 14,053.00
Interest
$ 216.00
Ending cash balance
$ 27,025.00
$ 39,781.00
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