Reference no: EM133129033

Question - Flags Ski Resorts, Inc. expects to have a cash balance of $123,600 as they begin the new operating year on January 1, 2021.

These are the relevant monthly budget data for the first two months of 2021:

1. Collections from customers: January $191,000, February $208,000.

2. Payments to suppliers: January $47, 100, February $69,200.

3. Wages: January $167,000, February $176,000. Wages are paid in the month they are incurred.

4. Administrative expenses: January $15,000, February $15,000. These costs include depreciation of $4,000 per month. All other costs are paid as incurred.

5. Selling expenses: January $22,900, February $37,300. These costs are exclusive of depreciation. They are paid as incurred.

6. Sales of short-term investments in January are expected to realize $25,000 in cash.

9 Flags has a line of credit Citi Bank New York that enables it to borrow up to $300,000. The company wants to maintain a minimum monthly cash balance of $100,000.

Required - Prepare a cash budget for January 2021 and February 2021 for the 9 Flags Ski Resorts.