Nemani Corporation is projecting a cash balance of $31,785 in its December 31, 2

Question

Nemani Corporation is projecting a cash balance of $31,785 in its December 31, 2013, balance sheet. Nemani schedule of expected collections from customers for the first quarter of 2013 shows total collections of $180,885. The schedule of expected payments for direct materials for the first quarter of 2013 shows total payments of $40,200. Other information gathered for the first quarter of 2013 is: sale of equipment $3,392; direct labor $70,178, manufacturing overhead $34,583, and purchase of securities $12,372. Selling and administrative expenses are projected to be $45,117; this figure includes $1,117 in depreciation expense on the office equipment. All costs and expenses will be paid in cash. Nemani wants to maintain a balance of at least $25,000 cash at the end of each quarter.

Explanation / Answer

Cash Budget Cash Collection Cash collected from customer $ 180,885.00 Sale of equipmment $ 3,392.00 Total Cash Collected $ 184,277.00 Cash payment Direct material $ 40,200.00 Direct Labor $ 70,178.00 Manufacturing Overhead $ 34,583.00 Purchase of securities $ 12,372.00 Selling & Admin Expenses $ 44,000.00 Total Cash payment $ 201,333.00 Opening Cash balance $ 31,785.00 Ending Cash Balance $ 14,729.00 Minimum cash balance required $ 25,000.00 Required Total Financing (Borrowing) $ 10,271.00 Ending cash balance after Borrowing $ 25,000.00

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