Question

Nadia Company expects to have a cash balance of $44,800 on January 1, 2020. Nadia has budgeted the following for the first two months of the year 2020:

1.		Collections from customers: January $90,900; February $109,300.
2.		Payments to suppliers: January $39,900; February $49,500.
3.		Direct labour: January $29,700; February $35,300. Wages are paid in the month they are incurred.
4.		Manufacturing overhead: January $25,000; February $30,200. Overhead costs are paid as incurred.
5.		Selling and administrative expenses: January $15,900; February $22,000. These costs do not include depreciation and they are paid as incurred.
6.		Sales of investments in January are expected to realize $10,100 in cash. Nadia Company wants to keep a minimum monthly cash balance of $20,000.

Prepare a cash budget for January and February.

Answer 1

NADIA COMPANY Cash budget
	January	February
Beginning balance of Cash	$44,800	$35,300
Add: Receipts
Collections from customer	$90,900	$109,300
Sales of securities	$10,100
Total receipts	$101,000	$109,300
Total availabble balance (A)	$145,800	$144,600
Less: Disbursement:
Payment to Supplier	$39,900	$49,500
Direct Labour	$29,700	$35,300
Manufacturing overhead Cost	$25,000	$30,200
Selling and Administrative Expenses	$15,900	$22,000
Total dsbursement (B)	$110,500	$137,000
Excess/ Deficiency : (A-B )	$35,300	$7,600
Financing:
Add: Borrowings	$0	$12,400 (Bal Fig.)
Less: Repayments	$0
Ending cash balance	$35,300	$20,000