Assignment
Prepare for StartUp Company, in good form and without abbreviations, a cash budget for the month of January, 2015.
StartUp Company has asked you to prepare a cash budget for the month of January 2015, using the following information:
Projected cash balance at December 31, 2014, $2,000
Minimum cash balance desired January 31, 2015, $4,000.
Minimum cash balance desired, December 31, 2015, $8,000
Projected transactions in January are:
Cash collections from sales $ 25,000
Cash from tax refund 14,000
Purchases of merchandise inventory 10,000
Selling and administrative expenses (excluding depreciation) 25,000
Depreciation of building and equipment 15,000
Purchases of store equipment (one-half to be paid in February) 40,000
Declaration of a dividend (100% to be paid in February) 12,000
Amortization of patents 11,000
Where a projected transaction involves a cash outlay, unless otherwise noted the cash will be paid in January.
The company has a line of credit at the bank, which allows borrowing up to $100,000. Since March 2014, the company has had loans of $30,000 outstanding at 12% interest. Interest is payable quarterly on March 31, June 30, September 30, and December 31.