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Wildhorse Company expects to have a cash balance of $59,500 on January...

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Accounting

Wildhorse Company expects to have a cash balance of $59,500 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017.

1. Collections from customers: January $84,500, February $159,500.
2. Payments to suppliers: January $53,500, February $88,500.
3. Wages: January $31,710, February $41,710. Wages are paid in the month they are incurred.
4. Administrative expenses: January $22,710, February $25,710. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $16,710, February $21,710. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $13,710 in cash. Wildhorse Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $33,500.

Prepare a cash budget for January and February.

Note: Could you please also explain the step on how to find the Beginning Cash Balance in February? Thank you and I appreciate your help.

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