The Following Budget Estimates Have Been Prepared by Flowers Company

Essay

The following budget estimates have been prepared by Flowers Company: The company likes to maintain a minimum cash balance of £50,000.
Any excess cash is invested in a money market account earning 8 per cent compounded monthly. Interest is reinvested in the money market account. Any cash deficiencies are covered by a withdrawal from the money market account. If additional cash is needed, the company has a line of credit at 12 per cent interest with the local bank.
Assume a cash balance on January 1 of £50,000, a money market account balance of £0, and a credit line loan balance of £0.
Required:
Prepare a cash budget for each of the first three months of the year.