Question

Danner company expects to have a cash balance of $58,005 on january 1, 2017. relevant monthly budget data for the first 2 months of 2017 are as follows: collections from customers: january $109,565, february $193,350. payments for direct materials: january $64,450, february $96,675. direct labor: january $38,670, february $58,005. wages are paid in the month they are incurred. manufacturing overhead: january $27,069, february $32,225. these costs include depreciation of $1,933 per month. all other overhead costs are paid as incurred. selling and administrative expenses: january $19,335, february $25,780. these costs are exclusive of depreciation. they are paid as incurred. sales of marketable securities in january are expected to realize $15,468 in cash. danner company has a line of credit at a local bank that enables it to borrow up to $32,225. the company wants to maintain a minimum monthly cash balance of $25,780. prepare a cash budget for january and february. (do not leave any answer field blank. enter "0" for amounts.)

Answer 1

Here is the cash budget for Danner Company:

DANNER COMPANY
Cash Budget
For the Two Months Ending February 28, 2017

............................................. January.......... February
Beginning cash balance........ 58,185............ 35,557
Receipts
Collections from customers.... 109,905............ 193,950
Sale of investment ................ 15,516.......... ....... -
Total receipts ........................ 125,421 ............193,950
Total available cash........ .....183,606 ............229,507

Less: Disbursements
Payments to suppliers ............ 64,650............ 96,975
Wages …………………………...38,790............ 58,185
Administrative expenses .......... 25,214 ............ 30,386
Selling expenses ..................... 19,395............ 25,860
Total disbursements .......... ....148,049 ............211,406

Excess of available cash
over disbursements ............... 35,557 .......... .... 18,101
Financing .......... .......... ............ - .......... .........7,759

Ending cash balance .......... .... 35,557 .......... ... 25,860