Danner Company expects to have a cash balance of $54,585 on January 1, 2017. Rel

Question

Danner Company expects to have a cash balance of $54,585 on January 1, 2017. Relevant monthly budget data for the first 2 months of 2017 are as follows.

Sales of marketable securities in January are expected to realize $14,556 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $30,325. The company wants to maintain a minimum monthly cash balance of $24,260.

Collections from customers: January $103,105, February $181,950. Payments for direct materials: January $60,650, February $90,975. Direct labor: January $36,390, February $54,585. Wages are paid in the month they are incurred. Manufacturing overhead: January $25,473, February $30,325. These costs include depreciation of $1,819 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $18,195, February $24,260. These costs are exclusive of depreciation. They are paid as incurred.

Explanation / Answer

DANNER Company Cash Budget For the Month Ended January & february January February    Cash balance, beginning                        54,585                         33,357    Add :   Cash Reciept Collection from customers                      103,105                      181,950 Sale of Marketable Security                        14,556                                  -   Total Cash Reciept                      117,661                      181,950    Total cash available                      172,246                      215,307    Less   Disbursements: Payment for Direct Material                        60,650                         90,975 Direct labor                        36,390                         54,585 Manufacturing Overhead                        23,654                         28,506 Selling & Administrative Overhead                        18,195                         24,260 Total disbursements                      138,889                      198,326    Excess (deficiency) of receipts over disbursements                        33,357                         16,981    Financing: Add:           Borrowings                                 -                             7,279 Less :           Repayments                                 -                                    -      Cash balance, ending                        33,357                         24,260

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