ACCT105 – ACCOUNTING FOR NON ACCOUNTING MAJORS

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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.
Formulas included. Enter amounts in highlighted areas to complete the budget
Edge Soccer Programs
Cash Budget
For the Two Months Ended February 28
January
Beginning cash balance
Cash receipts from customers
Collection of note receivable
Cash available
Cash payments:
Equipment purchases
Selling and administrative expenses
Total cash payments
Ending cash balance before financing
Minimum cash balance desired
Projected cash excess (deficiency)
Financing:
Borrowing
Total effects of financing
Ending cash balance
$
–
$
$
–
$
–
$
$
–
o complete the budget
grams
et
ed February 28
$
$
February
–
$
$
$
$
$
$
$
–
$
$
$
$
Total
–
–
$
$
$
$
$
$
–
$
–
$
$
–
–
Instructions (Budget in a service Company)
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.