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SnBudBet 1. Prepare a cash budget for January and February. Malone Company expects to have a cash balance of $46,000 on January 1, 20x1. The company needs to maintain a minimum cash balance of $20,000 and has a line of credit at a local bank that enables it to borrow up to $25,000. All borrowing occurs at the beginning of the month and repayments at the end of the month. Interest is 12% per year and is paid when principal is repaid. Relevant monthly budget data for the first 2 months of 20x1 are as follows: Collections from customers Cash payments January $85,000 116,000 February $150,000 115,000 2. Harrington Company expects to have a cash balance of $35,000 on January 1, 20x1. The company needs to maintain a minimum cash balance of $25,000 and has a line of credit at a local bank that enables it to borrow up to $50,000 in $1,000 increments. All borrowing occurs at the beginning of the month and repayments at the end of the month. Interest is 12% per year and is paid monthly on the unpaid balance. Relevant monthly budget data for the first 2 months of 20x1 are as follows: Collections from customers Operating expenses (including $6,000 of depreciation) Merchandise purchases paid Equipment to be purchased for cash Dividends paid January February $ 88,000 100,000 55,000 52,000 10,000 46,000 54,000 15,000

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