Bastille Corporation prepares monthly cash budgets. Here are the relevant data from operating...


Bastille Corporation prepares monthly cash budgets. Here are the relevant data from operating budgets for 2017.

January February
Administrative 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 except for administrative expenses, which 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.

Prepare a cash budget for January and February.

Cash Budget

A cash budget refers to a budget that provides a proper summary of cash paid or received during particular months or quarters. The cash budget enables a company to better manage its cash.

Answer and Explanation: 1

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Cash budget
Beginning Cash 46,000 42,000
Collections from customers 326,000 378,000
Notes receivables ...

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Cash Budget: Definition & Examples


Chapter 17 / Lesson 3

See what cash budgets are, their purpose, and the importance of a cash budget in accounting. Learn how to prepare a cash budget and see cash budget examples.

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