Question

PA6.

LO 7.3Relevant data from the Poster Company’s operating budgets are:



Additional data: Capital assets were sold in January for $10,000 and $4,500 in May. Dividends of $4,500 were paid in February. The beginning cash balance was $60,359 and a required minimum cash balance is $59,000. Use this information to prepare a cash budget for the first two quarters of the year

Answer 1

(The data is missing so we cannot prepare the complete cash budget but lets see how it is prepared. The data given in the question has only been added in cash budget)

Cash Budget is prepared in same way as statement of cashflow. The detail cash budget format is given below.

Poster Company

Cash budget

1st and 2nd quarter

Cash from operations

Sales xxxx

Purchase (xxxx)

Other expenses paid (xxxx)

Net cash from operation xxxx

Cash from Investment activities

Sale of Assets (10,000+4,500) $ 14,500

Any investment made (xxxxxx)

Net Cash from investing activities xxxxxx

Cash from Finance Activities

Financial Charges paid ( xxxxxxx)

Dividednd paid $ 4,500

Net Cash from Financing activities xxxxxxxx

Net cash increase/ decrease xx/ (xx)

Opening balance $60,359

Cash balance at end xxxxx

(xxx represents missing values)