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Expert-verified Found in: Page 1235 ### Horngren'S Financial And Managerial Accounting

Book edition 6th
Author(s) Tracie L. Miller-Nobles, Brenda L. Mattison
Pages 992 pages
ISBN 9780134486833

# Preparing the financial budget—cash budget Use the original schedule of cash receipts completed in Exercise E22-26, Requirement 1, and the schedule of cash payments completed in Exercise E22-27 to complete a cash budget for Marcel Company for January, February, and March. Additional information: Marcel’s beginning cash balance is $5,000, and Marcel desires to maintain a minimum ending cash balance of$5,000. Marcel borrows cash as needed at the beginning of each month in increments of $1,000 and repays the amounts borrowed in increments of$1,000 at the beginning of months when excess cash is available. The interest rate on amounts borrowed is 8% per year. Interest is paid at the beginning of the month on the outstanding balance from the previous month.

The balances in prepaid property taxes, accounts payable, and utilities payable are $3,330,$4,800, $900. See the step by step solution ### Step by Step Solution ## Step 1: Preparation of cash budget  Particulars January February March Beginning cash balance$5,000 $5,380$5,010 Cash receipts $8,960$12,080 $11,340 Cash payments: Direct materials$0 $3,100$3,500 Direct labor cost $3,300$3,500 $3,600 Utilities for plant$0 $650$650 Property taxes on plant $200*12 =$2,400 - - Utilities for office $0$250 $250 Property taxes on office$170*12 =$2,040 - - Office salaries$3,500 $3,500$3,500 Total cash payments $14,340$14,500 $16,300 Ending cash balance before financing (380)$2,960 $50 Minimum cash balance desired ($5,000) ($5,000) ($5,000) Projected cash excess (deficiency) ($5,380) ($2,960) ($4,950) Financing (borrowing)$5,380 $2,050$4,950 Ending cash balance $5,380$5,010 $5,000 ## Step 2: Calculation of balances in prepaid property taxes, accounts payable, and utilities payable. Prepaid property taxes = (tax on office+ tax on plant)*9 = ($200+$170)*9 =$3,330

Accounts payable = $4,800 Utilities payable = Utilities on office+ utilities on plant =$650 + $250 =$900 ### Want to see more solutions like these? 