The Accountant has not been on vacation for an entire year and decides to take a couple
Question:
The Accountant has not been on vacation for an entire year and decides to take a couple of days off. The Manager of your company asked you to prepare a cash budget, as the Board of Directors are going to meet tomorrow. Your company is a service company and caters to clients with a minimum of $500,000 per annum income. A review of the company’s cash policy revealed that there must be a minimum balance of $100,000. The current opening cash balance is $300,000. The information under review pertains to periods ending June 30th and September 30th 2022. The following information has been collected from other portions of the master budget and elsewhere.
Estimated Collections from Clients:
1st period $420,000
2nd period $1,000,000
Estimated Payments:
Salaries
1st period $280,000
2nd period $350,000
Overhead costs
1st period $250,000
2nd period $300,000
Selling and Administrative (includes $5,000 depreciation)
1st period $125,000
2nd period $140,000
Other (Expected):
Sale of machinery (1st period) $40,000
Interest from investment (2nd period) $60,000
Purchase of new machinery (2nd period) $226,000
Required: Prepare a cash budget for each of the periods in 2022.
Expert Answer:
