Question

Nadia Company expects to have a cash balance of $45,400 on January 1, 2020. Nadia has budgeted the following for the first two months of the year 2020:

1.		Collections from customers: January $89,800; February $109,400.
2.		Payments to suppliers: January $39,700; February $49,900.
3.		Direct labour: January $30,000; February $35,200. Wages are paid in the month they are incurred.
4.		Manufacturing overhead: January $24,800; February $30,300. Overhead costs are paid as incurred.
5.		Selling and administrative expenses: January $15,800; February $22,000. These costs do not include depreciation and they are paid as incurred.
6.		Sales of investments in January are expected to realize $10,000 in cash. Nadia Company wants to keep a minimum monthly cash balance of $20,000.

Prepare a cash budget for January and February.

Answer 1

Cash Budget
				January	February
Beginning cash balance	$         45,400.00	$         34,900.00
Add: Receipts
Collections from customers	$         89,800.00	$       109,400.00
Sale of securities	$         10,000.00	$                         -
Total receipts	$         99,800.00	$       109,400.00
Total available cash	$       145,200.00	$       144,300.00
Less: Disbursements
Payment to Supplier	$         39,700.00	$         49,900.00
Direct Labor	$         30,000.00	$         35,200.00
Manufacturing Overhead	$         24,800.00	$         30,300.00
Selling and Administrative Expense	$         15,800.00	$         22,000.00
Total disbursements	$       110,300.00	$       137,400.00
Excess (deficiency) of available cashover cash disbursements	$         34,900.00	$            6,900.00
Financing
Borrowings		$         13,100.00
Repayments
Ending cash balance	$         34,900.00	$         20,000.00