Bastille Corporation prepares monthly cash budgets. Here are relevant operating budgets for 2017:

JanuaryFebruary
Sales$360,000$400,000
Purchases120,000130,000
Salaries84,00081,000
Administration expenses72,00075,000
Selling expenses79,00088,000
All sales and purchases are on account.

Budgeted collections and disbursement data are given below.

All other expenses are paid in the month incurred.

Administrative expenses include $1,000 of depreciation per month.

Other data:
1.Collections from customers: January $326,000; February $378,000.
2.Payments for purchases: January $110,000; February $135,000.
3.Other receipts: January - collection of December 31, 2016 notes receivable $15,000; February - proceeds from sale of securities $4,000.
4.Other disbursements: February $10,000 cash dividend.
The company's cash balance on January 1, 2017 is expected to be $46,000. The company wants to maintain a minimum cash balance of $40,000.

Required:

Prepare a cash budget for January and February.

Answer and Explanation:

The Preparation of the cash budget for January and February is prepared below:-

                                          Bastille Corporation  

                                               Cash budget

                              for the month of January and February  

Particulars                                 January             February  

Beginning cash balance         $46,000              $43,000

Add: Receipts                      

Customer collection                 $326,000           $378,000

Notes receivable collection     $15,000              $0

Sale of marketable securities    0                        $4,000

Total receipts                            $341,000             $382,000

Total cash available                  $387,000           $425,000

Less:  

Cash payments during the

year

Purchases                                   $110,000           $135,000

Salaries                                       $84,000            $81,000

Administrative expenses           $71,000             $74,000

Selling expenses                         $79,000            $88,000

Dividends                                     0                        $10,000

Disbursement total                     $344,000          $388,000

Excess of cash  

available                                      $43,000             $37,000

Financing

Borrowings                                   0                        $3,000

Repayments                                  0

Ending cash balance                   $43,000            $40,000

Note: February beginning balance is the balance of ending cash balance.

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