Fayette Medical Clinic has budgeted the following cash flows:

Answer:

Cash budget

Particulars                  January      February          March

Beginning Balance  $ 16,000  $ 11,200  $ 10,000

Cash Receipts         $ 240,000  $ 232,000  $ 272,000

Cash for disbursements(y) $ 256,000  $ 243,200  $ 282,000

Less: Cash payments    

Inventories                     $ 220,000  $ 164,000  $ 190,000

S & A expenses             $ 62,000      $ 64,000  $ 54,000

Interest on line of credit   $ 800           $ 800          $ 800

Total disbursements (z)   $ 282,800  $ 228,800  $ 244,800

Excess/Deficiency x=y-z  $ (26,800)  $ 14,400  $ 37,200

Min. cash required            $ 10,000  $ 10,000  $ 10,000

Total cash needed    $ 36,800  $ (4,400)  $ (27,200)

Financing                    $ 38,000  $ -                    $ -

Interest at 1% per month                $ 380           $ 340

Balance cash before repayment  $ 14,020  $ 36,860

Repayment                           $ 4,020  $ 26,860

Ending Balance  $ 11,200  $ 10,000  $ 10,000

Answer:

January $11,200

February $10,000

March $10,000

Explanation

CASH BUDGET FOR JANUARY

Beginning cash balanc$16,000

Add: Cash receipts 240,000

Cash available 256,000

Less: Cash payments

For inventory purchases220,000

For S&A expenses 62,000

Interest expense per month 800

Total budgeted payment 282,800

Payments minus receipts

Surplus (shortage) (26,800)

Financing Activity

Borrowing (repayment) 38000

Ending cash balance 11200

CASH BUDGET FOR FEBRUARY

Beginning cash balanc$11,200

Add: Cash receipts 232,000

Cash available 243,200

Less: Cash payments

For inventory purchases 164,000

For S&A expenses 64,000

Interest expense per month 1180

Total budgeted payment 229,180

Payments minus receipts

Surplus (shortage) 14,020

Financing Activity

Borrowing (repayment) (4,020)

Ending cash balance 10,000

CASH BUDGET FOR MARCH

Beginning cash balance $10,000

Add: Cash receipts 272,000

Cash available 282,000

Less: Cash payments

For inventory purchases 190,000

For S&A expenses 54,000

Interest expense per month 1,140

Total budgeted payment 245,140

Payments minus receipts

Surplus (shortage) 36,860

Financing Activity

Borrowing (repayment) (26,850)

Ending cash balance 10,000