Question

6. Marmul Packaging Company prepares monthly cash budgets.
Relevant data from operating budgets for 2020 are:
January (S) February(S)
700,000 800,000
170,000
250,000
120.000
150,000
160,000

Sales
Direct labor
Manufacturing overhead
150.000
Selling and administrative exp.
Other data:

a) Payment for Purchase of Direct Material for January is
$174,000 and Feb. $178,000.
(b) Credit sales: December 2019, $560,000.
c) Other receipts: January - Collection of interest receivable
$8,000;

February-Proceeds from sale
of securities $30,000.
(d) Other disbursements: February - payment of $70,000
for land

All sales are on account. Collections are expected to be 60%
in the month of sale, 30% in the first month following the
sale, and 10% in the second month following the sale.
All other items above are paid in the month incurred.
The company's cash balance on January 1, 2020, is expected

to be $120,000. The company wants to maintain a minimum
cash balance of $100,000.
Instructions:
a) Prepare schedules for expected collections from
customers .
(b) Prepare a cash budget for January and February 2020
in columnar form.

Answer 1