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1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
$ $ $ $
Opening Cash 10,000
Collection from Customers 125,000 150,000 160,000 221,000
Payments:
Payments of materials 20,000 35,000 35,000 54,000
Other Expenses 25,000 20,000 20,000 17,000
Salaries and Wages 90,000 95,000 95,000 109,000
Income tax 5,000
Machinery Purchase 20,000Additional Information:
The company desires to maintain a cash balance of $15,000 at the end of each quarter.
Cash can be borrowed or repaid in multiple s of $500 at an interest rate of 10% per year.
Management does not want to borrow cash more than what is necessary and want to repay as early as possible.In an any event, loans cannot be extended Beyond a quarter. Interest is computed and paid when principal is paid. Assume borrowing takes place at the beginning and repayment at the end of the quarter.Required:
Prepare the cash Budget.Please do not simply set full questions and expect a full answer – you presumable have an answer in the same book in which you found the question (unless it is homework, and we do not provide answers to homework!).
Say which part of the answer you are not clear about and then I will try and help you.
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