Beard Company has $13,600 in cash on hand on January 1 and has collected the following budget data: Beard Company January February Sales $530,400 $563,500 Cash receipts from customers $443,200 $496,900 Cash payments for direct materials $175,262 $161,859 Direct labor costs $137,830 $112,431 Manufacturing overhead costs $55,937 $53,439 (including depreciation of $2,300 per month) Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Beard Company has cash payments for selling and administrative expenses including salaries of $45,000 per month plus commissions that are 2% of sales, all paid the month of the sale. The company requires a minimum cash balance of $10,000. 1. Prepare a cash budget for January and February. Round to the nearest dollar. Beard CompanyCash BudgetFor the Two Months Ended February 28 January February Total Beginning cash balance Cash receipts Cash available Cash payments: Purchases of direct materials Direct labor Manufacturing overhead Selling and administrative expenses Total cash payments Ending cash balance before financing Minimum cash balance desired Projected cash excess (deficiency) Financing: Borrowing Principal repayments Total effects of financing Ending cash balance

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Beard Company has $13,600 in cash on hand on January 1 and has collected the following budget data:

Beard Company	January	February
Sales	$530,400	$563,500
Cash receipts from customers	$443,200	$496,900
Cash payments for direct materials	$175,262	$161,859
Direct labor costs	$137,830	$112,431
Manufacturing overhead costs	$55,937	$53,439
(including depreciation of $2,300 per month)

Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Beard Company has cash payments for selling and administrative expenses including salaries of $45,000 per month plus commissions that are 2% of sales, all paid the month of the sale. The company requires a minimum cash balance of $10,000.

1. Prepare a cash budget for January and February. Round to the nearest dollar.

Beard CompanyCash BudgetFor the Two Months Ended February 28

	January	February	Total
Beginning cash balance
Cash receipts
Cash available
Cash payments:
Purchases of direct materials
Direct labor
Manufacturing overhead
Selling and administrative expenses
Total cash payments
Ending cash balance before financing
Minimum cash balance desired
Projected cash excess (deficiency)
Financing:
Borrowing
Principal repayments
Total effects of financing
Ending cash balance

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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