Question

TUDIM TRU IUCU1UILLIUDIJIVI Blossom Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are as follows. January February $442,800 $492,000 147,600 153,750 Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses 110,700 86,100 123,000 92,250 97,170 104,550 All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and administrative expenses that include $1,230 of depreciation per month. Other data: 1. Credit sales: November 2019, $307,500; December 2019, $393,600. 2. Purchases of direct materials: December 2019, $123,000. 3. Other receipts: January-Collection of December 31, 2019, notes receivable $18,450; February-Proceeds from sale of securities $7,380. 4. Other disbursements: February-Payment of $7,380 cash dividend. The company's cash balance on January 1, 2020, is expected to be $73,800. The company wants to maintain a minimum cash balance of $61,500.

Answer 1

	Cash Budget
	Particulars			January	February
	Beginning cash balance			$   73,800.00	$   62,730.00
Add:	Receipts
	Collections from customers			$ 400,980.00	$ 457,560.00
	Notes Receivable			$   18,450.00
	Sale of securities				$     7,380.00
	Total receipts			$ 419,430.00	$ 464,940.00
	Total cash available			$ 493,230.00	$ 527,670.00
Less:	Disbursements
	Direct materials			$ 137,760.00	$ 151,290.00
	Direct labor			$ 110,700.00	$ 123,000.00
	Manu. OH			$   86,100.00	$   92,250.00
	Selling and Adm. OH			$   95,940.00	$ 103,320.00
	Dividends			$                 -	$     7,380.00
	Total disbursements			$ 430,500.00	$ 477,240.00
	Excess/(Deficiency)			$   62,730.00	$   50,430.00
	Financing:
Add:	Borrowings				$   11,070.00
Less:	Repayments
	Ending cash balance			$   62,730.00	$   61,500.00

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