Danner Company expects to have a cash balance of $51,060 on January 1, 2012. Rel

Question

Danner Company expects to have a cash balance of $51,060 on January 1, 2012. Relevant monthly budget data for the first 2 months of 2012 are as follows. Collections from customers: January $94,350, February $166,500. Payments for direct materials: January $55,500, February $77,700. Direct labor: January $33,300, February $49,950. Wages are paid in the month they are incurred. Manufacturing overhead: January $23,310, February $27,750. These costs include depreciation of $1,110 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $16,650, February $22,200. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $11,100 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $27,750. The company wants to maintain a minimum monthly cash balance of $22,200. Prepare a cash budget for January and February.

Explanation / Answer

Mayfield Company expects to have a cash balance of $46,000 on January 1, 2010. These are the relevant monthly budget data for the first two months of 2010.

1. Collections from customers: January $88,489, February $164,489.
2. Payments to suppliers: January $58,489, February $93,489.
3. Wages: January $30,000, February $40,000. Wages are paid in the month they are incurred.
4. Administrative expenses: January $21,000, February $28,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $16,395, February $21,395. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $12,000 in cash. Mayfield has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $20,000.


Complete the cash budget for January and February below. (List multiple items under receipts, disbursements and financing from largest to smallest amounts, e.g. 10, 5, 2.)

MAYFIELD COMPANY
Cash Budget
For the Two Months Ending February 28, 2010

January February
Beginning cash balance $
$

Add: Receipts
Payments to suppliersSelling expensesBorrowingsWagesAdministrative expensesCollections from customersRepaymentsSale of short-term investments
Administrative expensesSale of short-term investmentsBorrowingsRepaymentsCollectio… from customersPayments to suppliersWagesSelling expenses


Total receipts


Total available cash


Less: Disbursements
Sale of short-term investmentsBorrowingsWagesRepaymentsAdmi… expensesSelling expensesPayments to suppliersCollections from customers
BorrowingsAdministrative expensesCollections from customersWagesSale of short-term investmentsSelling expensesRepaymentsPayments to suppliers
Collections from customersAdministrative expensesSelling expensesBorrowingsRepaymentsSale of short-term investmentsWagesPayments to suppliers
RepaymentsPayments to suppliersAdministrative expensesSale of short-term investmentsWagesSelling expensesBorrowingsCollections from customers


Total disbursements


Excess (deficiency) of available cash over disbursements
Financing
Payments to suppliersCollections from customersWagesAdministrative expensesRepaymentsBorrowingsSale of short-term investmentsSelling expenses
Collections from customersSale of short-term investmentsAdministrative expensesWagesPayments to suppliersRepaymentsSelling expensesBorrowings


Ending cash balance $
$

• ANS : SIMILAR ONE HOPE IT HELPS
• In your cash budget you have money going out as receipts and money coming in as disbursements, so I'm not sure if you have the right format or not. The way is should be is:

Beginning balance January: $46,000
Add
Collections from customers: January $88,489
Subtract
Payments to suppliers: January $58,489
Wages: January $30,000
Administrative expenses: January $21,000 - $1,000 depr. = $20,000
Selling expenses: January $16,395
Add
Sales of short-term investments: January $12.000
Ending balance January: $21,605

Beginning balance February: $21,605
Add
Collections from customers: February $164,489
Subtract
Payments to suppliers: February $93,489
Wages: February $40,000
Administrative expenses: February $28,000 - $1,000 depr. = $27,000
Selling expenses: February $21,395
*Ending balance February: $4,210
*Since the company wants to maintain a minimum montly $20,000 cash balance, they will need to borrow $15,790 from the bank.
New ending balance for February; $20,000 Mayfield Company expects to have a cash balance of $46,000 on January 1, 2010. These are the relevant monthly budget data for the first two months of 2010.

1. Collections from customers: January $88,489, February $164,489.
2. Payments to suppliers: January $58,489, February $93,489.
3. Wages: January $30,000, February $40,000. Wages are paid in the month they are incurred.
4. Administrative expenses: January $21,000, February $28,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $16,395, February $21,395. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $12,000 in cash. Mayfield has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $20,000.


Complete the cash budget for January and February below. (List multiple items under receipts, disbursements and financing from largest to smallest amounts, e.g. 10, 5, 2.)

MAYFIELD COMPANY
Cash Budget
For the Two Months Ending February 28, 2010

January February
Beginning cash balance $
$

Add: Receipts
Payments to suppliersSelling expensesBorrowingsWagesAdministrative expensesCollections from customersRepaymentsSale of short-term investments
Administrative expensesSale of short-term investmentsBorrowingsRepaymentsCollectio… from customersPayments to suppliersWagesSelling expenses


Total receipts


Total available cash


Less: Disbursements
Sale of short-term investmentsBorrowingsWagesRepaymentsAdmi… expensesSelling expensesPayments to suppliersCollections from customers
BorrowingsAdministrative expensesCollections from customersWagesSale of short-term investmentsSelling expensesRepaymentsPayments to suppliers
Collections from customersAdministrative expensesSelling expensesBorrowingsRepaymentsSale of short-term investmentsWagesPayments to suppliers
RepaymentsPayments to suppliersAdministrative expensesSale of short-term investmentsWagesSelling expensesBorrowingsCollections from customers


Total disbursements


Excess (deficiency) of available cash over disbursements
Financing
Payments to suppliersCollections from customersWagesAdministrative expensesRepaymentsBorrowingsSale of short-term investmentsSelling expenses
Collections from customersSale of short-term investmentsAdministrative expensesWagesPayments to suppliersRepaymentsSelling expensesBorrowings


Ending cash balance $
$

• ANS : SIMILAR ONE HOPE IT HELPS
• In your cash budget you have money going out as receipts and money coming in as disbursements, so I'm not sure if you have the right format or not. The way is should be is:

Beginning balance January: $46,000
Add
Collections from customers: January $88,489
Subtract
Payments to suppliers: January $58,489
Wages: January $30,000
Administrative expenses: January $21,000 - $1,000 depr. = $20,000
Selling expenses: January $16,395
Add
Sales of short-term investments: January $12.000
Ending balance January: $21,605

Beginning balance February: $21,605
Add
Collections from customers: February $164,489
Subtract
Payments to suppliers: February $93,489
Wages: February $40,000
Administrative expenses: February $28,000 - $1,000 depr. = $27,000
Selling expenses: February $21,395
*Ending balance February: $4,210
*Since the company wants to maintain a minimum montly $20,000 cash balance, they will need to borrow $15,790 from the bank.
New ending balance for February; $20,000 Mayfield Company expects to have a cash balance of $46,000 on January 1, 2010. These are the relevant monthly budget data for the first two months of 2010.

1. Collections from customers: January $88,489, February $164,489.
2. Payments to suppliers: January $58,489, February $93,489.
3. Wages: January $30,000, February $40,000. Wages are paid in the month they are incurred.
4. Administrative expenses: January $21,000, February $28,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $16,395, February $21,395. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $12,000 in cash. Mayfield has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $20,000.


Complete the cash budget for January and February below. (List multiple items under receipts, disbursements and financing from largest to smallest amounts, e.g. 10, 5, 2.)

MAYFIELD COMPANY
Cash Budget
For the Two Months Ending February 28, 2010

January February
Beginning cash balance $
$

Add: Receipts
Payments to suppliersSelling expensesBorrowingsWagesAdministrative expensesCollections from customersRepaymentsSale of short-term investments
Administrative expensesSale of short-term investmentsBorrowingsRepaymentsCollectio… from customersPayments to suppliersWagesSelling expenses


Total receipts


Total available cash


Less: Disbursements
Sale of short-term investmentsBorrowingsWagesRepaymentsAdmi… expensesSelling expensesPayments to suppliersCollections from customers
BorrowingsAdministrative expensesCollections from customersWagesSale of short-term investmentsSelling expensesRepaymentsPayments to suppliers
Collections from customersAdministrative expensesSelling expensesBorrowingsRepaymentsSale of short-term investmentsWagesPayments to suppliers
RepaymentsPayments to suppliersAdministrative expensesSale of short-term investmentsWagesSelling expensesBorrowingsCollections from customers


Total disbursements


Excess (deficiency) of available cash over disbursements
Financing
Payments to suppliersCollections from customersWagesAdministrative expensesRepaymentsBorrowingsSale of short-term investmentsSelling expenses
Collections from customersSale of short-term investmentsAdministrative expensesWagesPayments to suppliersRepaymentsSelling expensesBorrowings


Ending cash balance $
$

• ANS : SIMILAR ONE HOPE IT HELPS
• In your cash budget you have money going out as receipts and money coming in as disbursements, so I'm not sure if you have the right format or not. The way is should be is:

Beginning balance January: $46,000
Add
Collections from customers: January $88,489
Subtract
Payments to suppliers: January $58,489
Wages: January $30,000
Administrative expenses: January $21,000 - $1,000 depr. = $20,000
Selling expenses: January $16,395
Add
Sales of short-term investments: January $12.000
Ending balance January: $21,605

Beginning balance February: $21,605
Add
Collections from customers: February $164,489
Subtract
Payments to suppliers: February $93,489
Wages: February $40,000
Administrative expenses: February $28,000 - $1,000 depr. = $27,000
Selling expenses: February $21,395
*Ending balance February: $4,210
*Since the company wants to maintain a minimum montly $20,000 cash balance, they will need to borrow $15,790 from the bank.
New ending balance for February; $20,000 Mayfield Company expects to have a cash balance of $46,000 on January 1, 2010. These are the relevant monthly budget data for the first two months of 2010.

1. Collections from customers: January $88,489, February $164,489.
2. Payments to suppliers: January $58,489, February $93,489.
3. Wages: January $30,000, February $40,000. Wages are paid in the month they are incurred.
4. Administrative expenses: January $21,000, February $28,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $16,395, February $21,395. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $12,000 in cash. Mayfield has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $20,000.


Complete the cash budget for January and February below. (List multiple items under receipts, disbursements and financing from largest to smallest amounts, e.g. 10, 5, 2.)

MAYFIELD COMPANY
Cash Budget
For the Two Months Ending February 28, 2010

January February
Beginning cash balance $
$

Add: Receipts
Payments to suppliersSelling expensesBorrowingsWagesAdministrative expensesCollections from customersRepaymentsSale of short-term investments
Administrative expensesSale of short-term investmentsBorrowingsRepaymentsCollectio… from customersPayments to suppliersWagesSelling expenses


Total receipts


Total available cash


Less: Disbursements
Sale of short-term investmentsBorrowingsWagesRepaymentsAdmi… expensesSelling expensesPayments to suppliersCollections from customers
BorrowingsAdministrative expensesCollections from customersWagesSale of short-term investmentsSelling expensesRepaymentsPayments to suppliers
Collections from customersAdministrative expensesSelling expensesBorrowingsRepaymentsSale of short-term investmentsWagesPayments to suppliers
RepaymentsPayments to suppliersAdministrative expensesSale of short-term investmentsWagesSelling expensesBorrowingsCollections from customers


Total disbursements


Excess (deficiency) of available cash over disbursements
Financing
Payments to suppliersCollections from customersWagesAdministrative expensesRepaymentsBorrowingsSale of short-term investmentsSelling expenses
Collections from customersSale of short-term investmentsAdministrative expensesWagesPayments to suppliersRepaymentsSelling expensesBorrowings


Ending cash balance $
$

• ANS : SIMILAR ONE HOPE IT HELPS
• In your cash budget you have money going out as receipts and money coming in as disbursements, so I'm not sure if you have the right format or not. The way is should be is:

Mayfield Company expects to have a cash balance of $46,000 on January 1, 2010. These are the relevant monthly budget data for the first two months of 2010.

1. Collections from customers: January $88,489, February $164,489.
2. Payments to suppliers: January $58,489, February $93,489.
3. Wages: January $30,000, February $40,000. Wages are paid in the month they are incurred.
4. Administrative expenses: January $21,000, February $28,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $16,395, February $21,395. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $12,000 in cash. Mayfield has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $20,000.


Complete the cash budget for January and February below. (List multiple items under receipts, disbursements and financing from largest to smallest amounts, e.g. 10, 5, 2.)

MAYFIELD COMPANY
Cash Budget
For the Two Months Ending February 28, 2010

January February
Beginning cash balance $
$

Add: Receipts
Payments to suppliersSelling expensesBorrowingsWagesAdministrative expensesCollections from customersRepaymentsSale of short-term investments
Administrative expensesSale of short-term investmentsBorrowingsRepaymentsCollectio… from customersPayments to suppliersWagesSelling expenses


Total receipts


Total available cash


Less: Disbursements
Sale of short-term investmentsBorrowingsWagesRepaymentsAdmi… expensesSelling expensesPayments to suppliersCollections from customers
BorrowingsAdministrative expensesCollections from customersWagesSale of short-term investmentsSelling expensesRepaymentsPayments to suppliers
Collections from customersAdministrative expensesSelling expensesBorrowingsRepaymentsSale of short-term investmentsWagesPayments to suppliers
RepaymentsPayments to suppliersAdministrative expensesSale of short-term investmentsWagesSelling expensesBorrowingsCollections from customers


Total disbursements


Excess (deficiency) of available cash over disbursements
Financing
Payments to suppliersCollections from customersWagesAdministrative expensesRepaymentsBorrowingsSale of short-term investmentsSelling expenses
Collections from customersSale of short-term investmentsAdministrative expensesWagesPayments to suppliersRepaymentsSelling expensesBorrowings


Ending cash balance $
$

• ANS : SIMILAR ONE HOPE IT HELPS
• In your cash budget you have money going out as receipts and money coming in as disbursements, so I'm not sure if you have the right format or not. The way is should be is:

Mayfield Company expects to have a cash balance of $46,000 on January 1, 2010. These are the relevant monthly budget data for the first two months of 2010.

1. Collections from customers: January $88,489, February $164,489.
2. Payments to suppliers: January $58,489, February $93,489.
3. Wages: January $30,000, February $40,000. Wages are paid in the month they are incurred.
4. Administrative expenses: January $21,000, February $28,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January $16,395, February $21,395. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $12,000 in cash. Mayfield has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $20,000.


Complete the cash budget for January and February below. (List multiple items under receipts, disbursements and financing from largest to smallest amounts, e.g. 10, 5, 2.)

MAYFIELD COMPANY
Cash Budget
For the Two Months Ending February 28, 2010

January February
Beginning cash balance $
$

Add: Receipts
Payments to suppliersSelling expensesBorrowingsWagesAdministrative expensesCollections from customersRepaymentsSale of short-term investments
Administrative expensesSale of short-term investmentsBorrowingsRepaymentsCollectio… from customersPayments to suppliersWagesSelling expenses


Total receipts


Total available cash


Less: Disbursements
Sale of short-term investmentsBorrowingsWagesRepaymentsAdmi… expensesSelling expensesPayments to suppliersCollections from customers
BorrowingsAdministrative expensesCollections from customersWagesSale of short-term investmentsSelling expensesRepaymentsPayments to suppliers
Collections from customersAdministrative expensesSelling expensesBorrowingsRepaymentsSale of short-term investmentsWagesPayments to suppliers
RepaymentsPayments to suppliersAdministrative expensesSale of short-term investmentsWagesSelling expensesBorrowingsCollections from customers


Total disbursements


Excess (deficiency) of available cash over disbursements
Financing
Payments to suppliersCollections from customersWagesAdministrative expensesRepaymentsBorrowingsSale of short-term investmentsSelling expenses
Collections from customersSale of short-term investmentsAdministrative expensesWagesPayments to suppliersRepaymentsSelling expensesBorrowings


Ending cash balance $
$
Beginning balance January: $46,000
Add
Collections from customers: January $88,489
Subtract
Payments to suppliers: January $58,489
Wages: January $30,000
Administrative expenses: January $21,000 - $1,000 depr. = $20,000
Selling expenses: January $16,395
Add
Sales of short-term investments: January $12.000
Ending balance January: $21,605

Beginning balance February: $21,605
Add
Collections from customers: February $164,489
Subtract
Payments to suppliers: February $93,489
Wages: February $40,000
Administrative expenses: February $28,000 - $1,000 depr. = $27,000
Selling expenses: February $21,395
*Ending balance February: $4,210
*Since the company wants to maintain a minimum montly $20,000 cash balance, they will need to borrow $15,790 from the bank.
New ending balance for February; $20,000
Beginning balance January: $46,000
Add
Collections from customers: January $88,489
Subtract
Payments to suppliers: January $58,489
Wages: January $30,000
Administrative expenses: January $21,000 - $1,000 depr. = $20,000
Selling expenses: January $16,395
Add
Sales of short-term investments: January $12.000
Ending balance January: $21,605

Beginning balance February: $21,605
Add
Collections from customers: February $164,489
Subtract
Payments to suppliers: February $93,489
Wages: February $40,000
Administrative expenses: February $28,000 - $1,000 depr. = $27,000
Selling expenses: February $21,395
*Ending balance February: $4,210
*Since the company wants to maintain a minimum montly $20,000 cash balance, they will need to borrow $15,790 from the bank.
New ending balance for February; $20,000
Beginning balance January: $46,000
Add
Collections from customers: January $88,489
Subtract
Payments to suppliers: January $58,489
Wages: January $30,000
Administrative expenses: January $21,000 - $1,000 depr. = $20,000
Selling expenses: January $16,395
Add
Sales of short-term investments: January $12.000
Ending balance January: $21,605

Beginning balance February: $21,605
Add
Collections from customers: February $164,489
Subtract
Payments to suppliers: February $93,489
Wages: February $40,000
Administrative expenses: February $28,000 - $1,000 depr. = $27,000
Selling expenses: February $21,395
*Ending balance February: $4,210
*Since the company wants to maintain a minimum montly $20,000 cash balance, they will need to borrow $15,790 from the bank.
New ending balance for February; $20,000

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