Danner Company expects to have a cash balance of $46,350 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows.
Collections from customers: January $87,550, February $154,500. |
Payments for direct materials: January $51,500, February $77,250. |
Direct labor: January $30,900, February $46,350. Wages are paid in the month they are incurred. |
Manufacturing overhead: January $21,630, February $25,750. These costs include depreciation of $1,545 per month. All other overhead costs are paid as incurred. |
Selling and administrative expenses: January $15,450, February $20,600. These costs are exclusive of depreciation. They are paid as incurred. |
Sales of marketable securities in January are expected to realize
$12,360 in cash. Danner Company has a line of credit at a local
bank that enables it to borrow up to $25,750. The company wants to
maintain a minimum monthly cash balance of $20,600.
Prepare a cash budget for January and February.
Solution
DANNER COMPANY | ||
Cash Budget | ||
For january and February' 2014 | ||
January | February | |
Beginning cash | $ 46,350.00 | $ 28,325.00 |
Cash Collections | $ 87,550.00 | $ 154,500.00 |
Sales for marketable securities | $ 12,360.00 | |
Available cash balance | $ 146,260.00 | $ 182,825.00 |
Cash Disbursements for | ||
Direct material | $ 51,500.00 | $ 77,250.00 |
Direct Labor | $ 30,900.00 | $ 46,350.00 |
Manufacturing Overheads | $ 20,085.00 | $ 24,205.00 |
Selling and Administrative expenses | $ 15,450.00 | $ 20,600.00 |
Total cash Disbursements | $ 117,935.00 | $ 168,405.00 |
Ending Cash Balance before financing | $ 28,325.00 | $ 14,420.00 |
Minimum Cash Balance Desired | $ 20,600.00 | $ 20,600.00 |
Projected cash Excess (deficit) | $ 7,725.00 | $ (6,180.00) |
Financing | ||
Borrowing | $ 6,180.00 | |
Principal repayments | $ - | $ - |
Total Effects of Financing | $ - | $ 6,180.00 |
Ending Cash Balance | $ 28,325.00 | $ 20,600.00 |
Danner Company expects to have a cash balance of $46,350 on January 1, 2020. Relevant monthly...
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