Budget in Service Company (Cash Budget) Edge Soccer Program (Edge) began the year with a cash balance of $10,500. The budget forecasts that collections from company owed
Budget in Service Company (Cash Budget)
Edge Soccer Program (Edge) began the year with a cash balance of $10,500. The budget forecasts that collections from company owed to the company by customers will be $11,000 in January and $15,200 in February. The soccer program is also supposed to receive $8,500 on a note’s receivable from a soccer club that owes Edge for training current player in January.
Edge plans to purchase soccer equipment in January and February with cash. The budgeted amounts of the purchases are $15,600 in January and $14,800 in February. Operating costs for the business is $2900 per month.
Edge requires $10,000 to maintain in the back account at all times. If the amount in the account falls below $10,000 the credit union extends credit to Edge immediately in multiples of $1000. Edge pays back any amounts borrowed each quarter in payments of $2000 plus 4% interest. The first payment occurs three months after the advance is made to Edge.
Requirement
Prepare a cash budget for January and February.
Sheet1
| Edge Soccer Programs | ||||
| Cash Budget | ||||
| For the Two Months Ended February 28 | ||||
| January | February | Total | ||
| Beginning cash balance | ||||
| Cash receipts from customers | ||||
| Collection of note receivable | ||||
| Cash available | ||||
| Cash payments: | ||||
| Equipment purchases | ||||
| Selling and administrative expenses | ||||
| Total cash payments | ||||
| Ending cash balance before financing | ||||
| Minimum cash balance desired | ||||
| Projected cash excess (deficiency) | ||||
| Financing: | ||||
| Borrowing | ||||
| Repayment of principal | ||||
| Total effects of financing | 0 | 0 | 0 | |
| Ending cash balance | $0 | $0 | $0 | |
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