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 company owed to the company by customers will be $11,000 in
January and $15,200 in February. The soccer program is also supposed to receive $8,500 on a
note’s receivable from a soccer club that owes Edge for training current players.
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 requires $10,000 to maintain in the back account at all times. If the amount in the
account falls below $10,000 the credit union 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 months after the advance is made to Edge.
Requirement
Prepare a cash budget for January and February.

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Cash Budget For the Two Months Ended February 28 January February Total Beginning cash
balance $10,500 Cash receipts from customers 1 1,000 15,200 Collection of note receivable 8,500
Cash available 30,000 Cash payments: Equipment purchases 15,600 14,800 Selling … Show more… Show more