Answer:
Answer is explained in the explanation section below.
Explanation:
We need to set up a cash budget for the Wildhorse Company in their first two months of the year 2022.
Company = Wildhorse
For the Two Months Ending February 2022
So, below is the Cash Budget:
January February
Beginning of Cash balance $124,200 $67500
Add: Receipts
Sale of Short Term Investments $32400 -
Collection from Customers $191700 $394200
Total Receipts $224100 $394200
Total Available Cash $348300 $461700
Less: Disbursements:
Wages $81000 $108000
Administrative Expenses $51300 $62100
($54000-$2700Dep.) ($64800-$2700Dep.)
Selling Expenses $40500 $54000
Payments to Suppliers $108000 $202500
Total Disbursements $280800 $426600
Excess or (Deficit) of Avble Cash $67500 $35100
Financing:
Add: Borrowings - $18900
Less: Repayments - -
Ending Cash Balance $67500 $54000
Explanation: As cash availability in February is only $ 35100, the company will borrow $18900 to maintain a minimum balance of $30,000.
Borrowing in February = Minimum Balance - Available Cash
Borrowing in February = $54000-$35100
Borrowing in February = $18900
