Question - Enright Company expects to have a cash balance of $64,760 on January 1, 2014. These are the relevant monthly budget data for the first two months of 2014.
1. Collections from customers: January $89,760, February $164,760.
2. Payments to suppliers: January $58,760, February $93,760.
3. Wages: January $30,024, February $40,024. Wages are paid in the month they are incurred.
4. Administrative expenses: January $21,024, February $24,024. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $15,024, February $20,024. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $12,024 in cash. Enright has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balances of $38,760.
Required - Prepare a cash budget for January and February.