Question

Webster corporation is preparing its cash budget for april. the march 31 cash balance is $37,000. cash receipts are expected to be $647,000 and cash payments for purchases are expected to be $614,500. other cash expenses expected are $27,600 selling and $34,100 general and administrative. the company desires a minimum cash balance at the end of each month of $36,000. if necessary, the company borrows enough cash to meet the minimum using a short-term note. webster's preliminary cash balance before loan activity for april is expected to be

Answer 1

Webster's preliminary cash balance before loan activity for April is arrived by starting with beginning cash balance then add the cash receipts and then deduct all the cash payments from them .

Beginning cash balance = $ 37,000

(+) Cash receipts = $ 647,000

Total = $ 684,000

(-) Cash payments:-

Purchases $ 614,500

Expenses $ 27,600

Selling Exp $ 34,100 $ 676,200

Preliminary cash balance before loan is $ 7,800