Question

Prepare a cash budget for the quarter ended March 31 for Windsor Corporation. Windsor Corporation expects the following cash receipts and disbursements during the first quarter of the year (receipts exclude new borrowings and disbursements exclude interest payments on borrowings since January 1):

January: Cash receipts 400,000, Cash disbursements360,000
February: Cash receipts 410,000, Cash disbursements490,000
March: Cash receipts 370,000, Cash disbursements390,000

The expected cash balance at January 1 is 45,000. Windsor wants to maintain a cash balance at the end of each month of at least30,000. Short-term borrowings at 1
Prepare a cash budget for the quarter ended March 31 for Windsor Corporation.

Answer 1

To prepare the cash budget for Windsor Corporation, we need to calculate the ending cash balance for each month. By considering the cash receipts and disbursements, we can determine the cash balance at the end of each month. Based on the given information, the ending cash balances for January, February, and March are $85,000, $5,000, and -$15,000, respectively.

Step-by-step explanation:

To prepare a cash budget for the quarter ended March 31 for Windsor Corporation, we need to consider the company's cash receipts and disbursements for each month. The expected cash balance at January 1 is $45,000, and Windsor wants to maintain a cash balance of at least $30,000 at the end of each month.

January: Cash receipts are $400,000 and cash disbursements are $360,000. Therefore, the ending cash balance for January is $45,000 + $400,000 - $360,000 = $85,000.

February: Cash receipts are $410,000 and cash disbursements are $490,000. The ending cash balance for February is $85,000 + $410,000 - $490,000 = $5,000.

March: Cash receipts are $370,000 and cash disbursements are $390,000. The ending cash balance for March is $5,000 + $370,000 - $390,000 = -$15,000.