Raymond Corporation is projecting a cash balance of $41,000 in its December 31,

Question

Raymond Corporation is projecting a cash balance of $41,000 in its December 31, 2009, balance sheet. Raymond’s schedule of expected collections from customers for the first quarter of 2010 shows total collections of $180,000. The schedule of expected payments for direct materials for the first quarter of 2010 shows total payments of $41,000. Other information gathered for the first quarter of 2010 is: sale of equipment $3,500; direct labor $70,000, manufacturing overhead $35,000, selling and administrative expenses $45,000; and purchase of securities $12,000. Raymond wants to maintain a balance of at least $30,000 cash at the end of each quarter. What is the expected borrowings?

Explanation / Answer

Particulars Amount Cash balance as on 31/12/2009 41000 $ Collection from customers in first quarter of 2010 180000 $ Payment for direct material -41000 $ Sale of equipement 3500 $ Direct labour -70000 $ Manufacturning overhead -35000 $ Selling and administrative expenses -45000 $ Purchase of securities -12000 $ 21500 $ maintainable balance 30000 $ Amount to be borrowed at the end of first quarter 8500 $

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