Question 1 Danner Company expects to have a cash balance of $45,495 on January 1

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Question 1 Danner Company expects to have a cash balance of $45,495 on January 1, 2017. Relevant monthly budget data for the first 2 months of 2017 are as follows. Collections from customers: January $85,935, February $151,650. Payments for direct materials: January s50,550, February $75,325. Direct labor: January $30,330, February $45,495. Wages are paid in the month they are incurred. Manufacturing overhead: January $21,231, February s25,275. These costs include depreciation of $1,517 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $15,165, February $20,220. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize?12 132 n cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $25,275, The company wants to maintain a minimum monthly cash balance of $20,220 Prepare?cash budget for January and February. (Do not leave any answer field blank. Enter "0" for the amounts) DANNER COMPANY Cash Budget anu

Explanation / Answer

The cash budget for two months is shown as follows:-

Danner Company

Cash Budget

For the month of January and February (Amounts in $)

Particulars January February Beginning Balance (A) 45,495 27,803 Add: Cash Receipts Collections from customers 85,935 151,650 Sale of Marketable securities 12,132 0 Total Cash Receipts (B) 98,067 151,650 Total Cash Available (C = A+B) 143,562 179,453 Less: Cash Disbursements Payments for direct materials 50,550 75,825 Direct labor expenses paid 30,330 45,495 Manufacturing overhead Paid (exluding depreciation $1,517) 19,714 23,758 Selling and Administrative Expenses 15,165 20,220 Total Cash Disbursements (D) 115,759 165,298 Excess or (Deficiency) of cash ( E = C - D) 27,803 14,155 Financing: Add: Borrowings 0 6,065 ($20,220 minimum bal - $14,155) Less: Repayments 0 0 Closing Cash Balance 27,803 20,220

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