Flounder Company expects to have a cash balance of 52470 on

Flounder Company expects to have a cash balance of $52,470 on January 1, 2017. Relevant monthly budget data for the first 2 months of 2017 are as follows.

Collections from customers: January $99,110, February $174,900. Payments for direct materials: January S58,300, February $87,450 Direct labor: January $34,980, February $52,470. Wages are paid in the month they are incurred. Manufacturing overhead: January $24,486, February S29,150. These costs include depreciation of $1,749 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $17,490, February $23,320. These costs are exdusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $13,992 in cash. Flounder Company has a line of credit at a local bank that enables it to borrow up to $29,150. The company wants to maintain a minimum monthly cash balance of $23,320. Prepare a cash budget for January and February. (Do not leave any answer field blank. Enter O for amounts.) FLOUNDER COMPANY Cash Budget January February

Solution

Jan Feb Cash budget: Cash Balance Beginning 52470 32065 Cash collection from customer 99110 174900 Sale of marketable securities 13992 Total receipts 113102 174900 Total Available cash 165572 206965 Less: Disbursement Payment of Material 58300 87450 Payment of Labour 34980 52470 Payment of Mfg OH 22737 27401 Payment of Selling and admin OH 17490 23320 Total disbursement 133507 190641 Excess (Deficiency) 32065 16324 Financing: Borrowings 0 6996 Repayments including Interest 0 0 Cash Balance, ending 32065 23320