Carpaitha Inc began 2009 with $140,000 in cash. The company plans to have $1,400,000 accrual basis sales revenue during the year, of which it plans to collect 80% in 2009 and the other 20% in 2010. The company plans to record the following expenses in 2009:

various operating expenses all paid during 2009... $1,050,000
depreciation expense....$105,000
interest expense paid on October 1, 2009....$25,000
interest expense accrued on December 31 2009....$12,500

Finally, the company plans on making a $100,000 dividend payment in July and on prepaying its 2010 factory insurance bill of $40,000 in December 2009.

What is Carpathia's December 31, 2009, budgeted cash balance?

To calculate Carpathia's December 31, 2009, budgeted cash balance, we need to consider the company's cash inflows and cash outflows.

Cash inflows:
1. Accrual basis sales revenue: The company plans to have $1,400,000 in sales revenue during the year. Since 80% of it is expected to be collected in 2009, the cash inflow from sales revenue would be 80% of $1,400,000, which is $1,120,000.

Cash outflows:
1. Various operating expenses: The company plans to pay $1,050,000 in operating expenses during 2009.
2. Depreciation expense: The company plans to record $105,000 in depreciation expense during 2009.
3. Interest expense paid on October 1, 2009: The company plans to pay $25,000 in interest expense.
4. Interest expense accrued on December 31, 2009: The company plans to accrue $12,500 in interest expense.
5. Dividend payment: The company plans to make a dividend payment of $100,000 in July.
6. Prepaid factory insurance bill: The company plans to prepay its 2010 factory insurance bill of $40,000 in December 2009.

Now, let's calculate the December 31, 2009, budgeted cash balance.

Starting cash balance (January 1, 2009): $140,000
Plus cash inflows:
- Accrual basis sales revenue collected in 2009: $1,120,000

Minus cash outflows:
- Various operating expenses: $1,050,000
- Depreciation expense: $105,000
- Interest expense paid on October 1, 2009: $25,000
- Interest expense accrued on December 31, 2009: $12,500
- Dividend payment: $100,000
- Prepaid factory insurance bill: $40,000

December 31, 2009, budgeted cash balance = Starting cash balance + Cash inflows - Cash outflows
= $140,000 + $1,120,000 - ($1,050,000 + $105,000 + $25,000 + $12,500 + $100,000 + $40,000)

Calculating the above equation will give you the budgeted cash balance for Carpathia Inc on December 31, 2009.