Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 42

Cash Budget Bill Joyce, CEO of Joyce and Associates, expects the firm to have $6,000 cash on hand at the end of 2009. He estimates the total revenues in 2010 to be $250,000, of which $175,000 will be collected during the year. Payroll and fringe benefits constitute the bulk of the firm’s expenditures and will amount to $160,000 in 2010. Other operating expenses, including $5,000 for depreciation and $3,000 for property taxes, are $18,000. The property tax expense is an increase of $500 from the current year. In addition, Bill Joyce plans to update the office equipment for $24,000 in 2010. He expects the payment in 2010 for the office equipment will be $6,000. The county in which the firm is located requires payment of at least one-half of property taxes before the end of the year and the remainder before June 30 of the following year. The desired ending cash balance is $6,000.

Required Can Bill meet the minimum cash balance? Show calculations.

Step 1 of 2

Cash disbursement is the cash payment made by the individual or the company is a specified period of time which could be week, month, year etc. These payments are made against the purchases made by firm or the operating expense which occur.