Holcomb Company expects to have a cash balance of $43,000 on January 1, 2014. These are the relevant monthly budget data for the first two months of 2014.
1. Collections from customers: January $85,000, February $132,000
2. Payments to suppliers: January $40,000, February $50,000
3. Wages: January $34,000, February $40,000. Wages are paid in the month they are incurred.
4. Administrative expenses: January $24,000, February $31,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $15,000, February $20,000. These costs are exclusive of
depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $12,000 in cash.
Holcomb has a line of credit at a local bank that enables it to borrow up to $40,000. The company wants to maintain a minimum monthly cash balance of $25,000.
Instructions
Prepare a cash budget for January and February.

Question

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The Answer of Holcomb Company expects to have a cash balance of $43,000 on January 1, 2014. These are the relevant monthly budget data for the first two months of 2014.
1. Collections from customers: January $85,000, February $132,000
2. Payments to suppliers: January $40,000, February $50,000
3. Wages: January $34,000, February $40,000. Wages are paid in the month they are incurred.
4. Administrative expenses: January $24,000, February $31,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $15,000, February $20,000. These costs are exclusive of
depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $12,000 in cash.
Holcomb has a line of credit at a local bank that enables it to borrow up to $40,000. The company wants to maintain a minimum monthly cash balance of $25,000.
Instructions
Prepare a cash budget for January and February.

Holcomb Company Expects to Have a Cash Balance of $43,000