Danner Company expects to have a cash balance of $54,326 on January 1, 2014. Rel
ID: 2468628 • Letter: D
Question
Danner Company expects to have a cash balance of $54,326 on January 1, 2014. Relevant monthly budget data for the first 2 months of 2014 are as follows.
Sales of marketable securities in January are expected to realize $11,810 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $29,525. The company wants to maintain a minimum monthly cash balance of $23,620.
Prepare a cash budget for January and February.
DANNER COMPANY
Cash Budget
For the Two Months Ending February 28, 2014
January
February
$
Collections from customers: January $100,385, February $177,150. Payments for direct materials: January $59,050, February $82,670. Direct labor: January $35,430, February $53,145. Wages are paid in the month they are incurred. Manufacturing overhead: January $24,801, February $29,525. These costs include depreciation of $1,181 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $17,715, February $23,620. These costs are exclusive of depreciation. They are paid as incurred.Explanation / Answer
Cash Budget is prepared as under:
DANNER COMPANY Cash Budget For the Two Months Ending February 28, 2014 Month Particulars January February Beginning Cash balance 54,326 30,706 Add: Budgeted Cash receipts $1,00,385 $1,77,150 Sale of Marketable Securities $11,810 cash available for use $1,66,521 $2,07,856 Less: cash Disbursements Direct Material $59,050 $82,670 Direct Labour $35,430 $53,145 Manufacturing overhead 23620 28344 Selling and administration expenses 17,715 23,620 Total disbusrement 1,35,815 1,87,779 Cash surplus/Deficit 30,706 20,077 Financing Borrowing 3,543 Repayment Interest Net cash from Financing 3,543 Budgeted ending cash balance 30,706 23,620Related Questions
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