John Wills, Bates & Hill Fabricators' budget director, has received budget information from several managers (see Exercises 5-8, 9, 11, 15, 17, 19, 20, 23, and 25) and is preparing the company's cash budget. In addition to the information he received from these managers, John knows the following:
• Bates & Hill plans to have $60,000 in its cash account on January 1.
• Bates & Hill plans to declare and pay dividends totaling $49,000 in January.
• Bates & Hill plans to purchase and pay cash for a piece of land in February at a cost of $72,000.
• Bates & Hill plans to purchase equipment in March at a cost of $60,000.
• Bates & Hill's income taxes from last quarter totaling $75,260 will be paid in January.
• Bates & Hill is required to maintain a minimum cash balance of $30,000 in its account at First National Bank.
Bates & Hill has negotiated with the First National Bank to provide a $175,000 line of credit that can be borrowed against in $1,000 increments on the first day of the month. Any repayments on the line of credit must also be made in $1,000 increments and are made on the last day of the month when cash is available. The annual interest rate on this line of credit is 12%. Any time a principal payment is made, all accrued interest to date is repaid.


Prepare Bates & Hill's cash budget for the first quarter.

  • CreatedFebruary 21, 2014
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