Generating of a cash budget

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Reference no: EM1312862

Generating of a Cash budget.

The following budget estimates have been prepared by Flowers Company:

	Cash Receipts	Cash Payments
January	$220,000	$220,000
February	380,000	400,000
March	320,000	319,800

The company likes to maintain a minimum cash balance of $50,000.

Any excess cash is invested in a money market account earning 8 percent compounded monthly. Interest is reinvested in the money market account. Any cash deficiencies are covered by a withdrawal from the money market account. If additional cash is needed, the company has a line of credit at 12 percent interest with the local bank.

Assume a cash balance on January 1 of $50,000, a money market account balance of $0, and a credit line loan balance of $0.

Required:

Prepare a cash budget for each of the first three months of the year

Reference no: EM1312862

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