Garza Company expects to have a cash balance of $ 55,200 on January 1, 2010. Rel
ID: 2390007 • Letter: G
Question
Garza Company expects to have a cash balance of $ 55,200 on January 1, 2010. Relevant monthly budget data for t he first 2 months of 2010 are as follows. Collections from customers: January $ 102,000, February $ 180,000. Payments for direct materials: January $60,000, February $841000 . Direct labor: January $36,000, February $ 54,000. Wages are paid in the month they are incurred. Manufacturing overhead: January $25,200, February $301000 . These costs include depredation of $ 1, 200 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $ 18,000, February $24,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of market able securities in January are expected to realize $12,000 in cash. Garza Company has a line of credit at a local bank that enables it to borrow up to $301000 . The company wants to maintain a minimum monthly cash balance of $ 24,000. Complete the cash budget for January and February. (List multiple entries from largest to smallest amounts, e.g. 1. 0, 5, 1. For January. If answer is zero, please enter 0, do not leave any fields blank.)Explanation / Answer
Gaza Company
Cash Budget
For the months ending February, 2010
January February
Beginning Cash Balance 55,200 31,200
Add : Receipts
Collections from customers 102,000 180,000
Sale of Marketable Securities 12,000 0
Total receipts 114,000 180,000
Total available cash 169,200 211,200
Less : Disbursement
Direct materials 60,000 84,000
Direct labor 36,000 54,000
Manufacturing OH 24,000 28,800
S & A expense 18,000 24,000
Total disbursements 138,000 190,800
Excess (deficiency) of available
cash over cash disbursement 31,200 20,400
Financing 0 3,600
Ending Cash Balance 31,200 24,000
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