Cash Budget for Higgins and Griffin Financial Planners

Higgins and Griffin Financial Planners have forecasted revenue for the first six months of 2005 as shown on the following table:

Month Nov. 2004 Dec-04 Jan-05 Feb Mar Apr May June

Revenue $48,000.00 $45,000.00 $25,000.00 $27,000.00 $30,000.00 $38,000.00 $40,000.00 $45,000.00

The firm collects 60% of its sales immediately, 39% one month after the sale, and 1% are written off as bad debts two months after the sale.

The firm assumes that wages and benefits paid to clerical personnel will be $7,000 per month while commissions to sales associates average 25% of collectible sales.

Each of the two partners is paid $5,000 per month. Commissions and partner salaries are paid one month after the revenue is earned.

Rent expense for their office space is $2,500 per month, and lease expense for office equipment is $800.

Utilities average $175 per month, except in May and June when they average only $100

The ending cash balance in December 2004 was $12,000

Create a cash budget for January to June 2005 and determine the firm's ending cash balance in each month assuming that the partners wish to maintain a minimum cash balance of $8,000.