John Wills, Bates & Hill Fabricators' budget director, has received budget information from several managers 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 declare and pay dividends totaling $36,750 in January. 

● Bates & Hill plans to purchase and pay cash for a piece of land in February at a cost of $54,000. 

● Bates & Hill plans to purchase equipment in March at a cost of $45,000. 

● Depreciation for manufacturing overhead $22,500 per month and for selling and administrative $7,500 per month.

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.

Required

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

Answer rating: 100% (QA)

SUNLAND HILL FABRICATORS Cash budget for the period January February and March Details January Febru... View the full answer