Fayette Medical Clinic has budgeted the following cash flows.February$232,000JanuaryMarchCash receiptsCash paymentsFor inventory purchasesFor S&A expenses$240,000$272,000220,00062,000164,00064,000190,00054,000Fayette Medical had a cash balance of $16,000 on January 1. The company desires to maintain a cash cushion of $10,000. Funds areassumed to be borrowed, in increments of $2,000, and repaid on the last day of each month; the interest rate is 1 percent per month.Repayments may be made in any amount available. Fayette pays its vendors on the last day of the month also. The company had amonthly $80,000 beginning balance in its line of credit liability account from this year's quarterly results.RequiredPrepare a cash budget. (Any repayments/shortage should be indicated with a minus sign. Round intermediate and final answers tothe nearest whole dollar amounts.)X Answer is not complete.Cash BudgetJanuaryFebruaryMarchSection 1: Cash receiptsBeginning cash balance16,000$10,20013,030Add: Cash receipts240,000 O232,000 O272,000Total cash available256,000242,200285,030Section 2: Cash paymentsFor inventory purchases220,000164,000190,000For S&A expenses62,00064,00054,000Interest expense per month800 V1,170 X1,140 VTotal budgeted disbursements282,800229,170245,140Section 3: Financing activities(26,800)13,03039,890Borrowing (repayment)37,000 XEnding cash balance10,200$13,030$39,890

Cash budget refers to a budget which shows the estimated cash flows of the company during a specific…

Answered: Required Prepare a cash budget. (Any…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required Prepare a cash budget. (Any repayments/shortage should be indicated with a minus sign. Round intermediate and final answers to the nearest whole dollar amounts.)