Prepare Cash Budget For 3 Months
Brewster Corporation expects the following cash receipts and disbursements during the first quarter of 2016 (receipts exclude new borrowings and disbursements exclude interest payments on borrowings since January 1, 2016)
| Cash receipts |
$330,000 |
$350,000 |
$320,000 |
| Cash disbursements |
310,000 |
390,000 |
330,000 |
The expected cash balance at January 1, 2016, is $122,000. Brewster wants to maintain a cash balance at the end of each month of at least $110,000. Short-term borrowings at 1% interest per month will be used to accomplish this, if necessary. Borrowings (in multiples of $1,000) will be made at the beginning of the month in which they are needed, with interest for that month paid at the end of the month. Prepare a cash budget for the quarter ended March 31, 2016.