Question

Carla Vista Company expects to have a cash balance of $49,050 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows. Collections from customers: January $92,650, February $163,500. Payments for direct materials: January $54,500, February $81,750. Direct labor: January $32,700, February $49,050. Wages are paid in the month they are incurred. Manufacturing overhead: January $22,890, February $27.250. These costs include depreciation of $1,635 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $16,350. February $21,800. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $13,080 in cash. Carla Vista Company has a line of credit at a local bank that enables it to borrow up to $27.250. The company wants to maintain a minimum monthly cash balance of $21,800 Prepare a cash budget for January and February

Answer 1

Solution

CARLA VISTA COMPANY
Cash Budget
For the Two months ended February 28, 2022
	January	February
Beginning Cash Balance	$        49,050.00	$    29,975.00
Add: Cash receipts
Collection from customers	$        92,650.00	$ 163,500.00
Cash from sale of investment	$        13,080.00
Total cash receipts	$     105,730.00	$ 163,500.00
Cash Available	$     154,780.00	$ 193,475.00
Less: Cash Payments
Payment to supplier	$        54,500.00	$    81,750.00
Payment for wages	$        32,700.00	$    49,050.00
Payment for manufacturing expenses	$        21,255.00	$    25,615.00
Payment for Selling and administrative expenses	$        16,350.00	$    21,800.00
Total Cash Payments	$     124,805.00	$ 178,215.00
Ending Cash Balance Before Financing	$        29,975.00	$    15,260.00
Financing
Borrowing		$       6,540.00
Repayments
Ending Cash Balance	$        29,975.00	$    21,800.00