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Complete the Budget in a Service Company (Cash Budget) assignment. Please use the template provided below.
The document must have the complete budget and show the entire process along with an explanation.
Add a brief explanation of the budget just like what you should do if you were in a meeting with senior management and you were the accountant who was tasked with presenting the budget. Put that explanation on the page below the budget that you have prepared.
Hint: The budget should start with the January beginning balance and the February ending balance should also be the ending balance for the two months combined column.
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BudgetinServiceCompanyAssignment11.docx
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BudgettemplateVer3.xlsx
Budget in Service Company (Cash Budget)
Edge Soccer Program (Edge) began the year with a cash balance of $10,500. The budget forecasts that collections from customers owed to the company will be $11,000 in January and $15,200 in February. The soccer program is also supposed to receive $8,500 in January on a note receivable from a soccer club that owes Edge for training.
Edge plans to purchase soccer equipment in January and February with cash. The budgeted amounts of the purchases are $15,600 in January and $14,800 in February. Operating costs for the business is $2900 per month.
Edge must maintain a minimum cash balance of $10,000 in their bank account at all times. If the amount in the bank account falls below $10,000, then bank extends credit to Edge immediately in multiples of $1000. Edge pays back any amounts borrowed each quarter in payments of $2000 plus 4% interest. The first payment occurs three (3) months after the bank has extended edge credit.
Requirement
Prepare a cash budget for January and February.
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Sheet1
| Formulas included. Enter amounts in highlighted areas to complete the budget | ||||
| Edge Soccer Programs | ||||
| Cash Budget | ||||
| For the Two Months Ended February 28 | ||||
| January | February | Total | ||
| Beginning cash balance | $ – 0 | $ – 0 | ||
| Cash receipts from customers | $ – 0 | $ – 0 | ||
| Collection of note receivable | $ – 0 | |||
| Cash available | $ – 0 | $ – 0 | $ – 0 | |
| Cash payments: | ||||
| Equipment purchases | $ – 0 | |||
| Selling and administrative expenses | $ – 0 | |||
| Total cash payments | $ – 0 | $ – 0 | $ – 0 | |
| Ending cash balance before financing | $ – 0 | $ – 0 | $ – 0 | |
| Minimum cash balance desired | $ – 0 | $ – 0 | ||
| Projected cash excess (deficiency) | $ – 0 | $ – 0 | $ – 0 | |
| Financing: | ||||
| Borrowing | $ – 0 | |||
| Total effects of financing | $ – 0 | $ – 0 | $ – 0 | |
| Ending cash balance | $ – 0 | $ – 0 | $ – 0 | |
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