Danner Company expects to have a cash balance of $46,800 on
January 1, 2020. Relevant monthly budget data for the first 2
months of 2020 are as follows.
|Collections from customers: January $88,400, February $156,000.|
|Payments for direct materials: January $52,000, February $78,000.|
|Direct labor: January $31,200, February $46,800. Wages are paid in the month they are incurred.|
|Manufacturing overhead: January $21,840, February $26,000. These costs include depreciation of $1,560 per month. All other overhead costs are paid as incurred.|
|Selling and administrative expenses: January $15,600, February $20,800. These costs are exclusive of depreciation. They are paid as incurred.|
Sales of marketable securities in January are expected to realize $12,480 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $26,000. The company wants to maintain a minimum monthly cash balance of $20,800.
Prepare a cash budget for January and February.
|Section 1:Cash Receipts|
|Beginning Cash Balance||46,800||28,600|
|Add: Cash collections||88,400||156,000|
|Cash Collection from sales of marketable securities||12,480||0|
|Total Cash Available||147,680||184,600|
|Section 2 Cash Payments|
|Manufacturing Overhead(Exclude depreciation)||20,280||24,440|
|Selling and administrative expenses||15,600||20,800|
|Total Cash Payments||119,080||170,040|
|Cash Excess (deficiency)||28,600||14,560|
|Add: Borrowing from Bank||-||6,240|
|Ending Cash Balance||28,600||20,800|
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