Chapter $7$ Homework

Question $7$ of $7$

$-12$

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Sheridan Company expects to have a cash balance of $$55,200$ on January $1,2025.$ These are the relevant monthly budget data for the first two months of $2025.$

Collections from customers: January $$85,200$ and February $$175,200.$

Payments to suppliers: January $$48,000$ and February $$90,000.$

Wages: January $$36,000$ and February $$48,000.$ Wages are paid in the month they are incurred.

Administrative expenses: January $$25,200$ and February $$28,800.$ These costs include depreciation of $$1,200$ per month. All other costs are paid as incurred.

Selling expenses: January $$18,000$ and February $$24,000.$ These costs are exclusive of depreciation. They are paid as incurred.

Sales of short$-$term investments in January are expected to realize $$14,400in$ cash. Sheridan has a line of credit at a local bank that enables it to borrow up to $$30,000.$ The company wants to maintain a minimum monthly cash balance of $$24,000.$

Prepare a cash budget for January and February. $($List items that increase cash balance first.$)$

SHERIDAN COMPANY

Cash Budget