Danner Company expects to have a cash balance of $47,250 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows. Collections from customers: January $89,250, February $157,500. Payments for direct materials: January $52,500, February $78,750. Direct labor: January $31,500, February $47,250. Wages are paid in the month they are incurred. Manufacturing overhead: January $22,050, February $26,250. These costs include depreciation of $1,575 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $15,750, February $21,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $12,600 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $26,250. The company wants to maintain a minimum monthly cash balance of $21,000. Prepare a cash budget for January and February.
Danner Company expects to have a cash balance of $47,250 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows. Collections from customers: January $89,250, February $157,500. Payments for direct materials: January $52,500, February $78,750. Direct labor: January $31,500, February $47,250. Wages are paid in the month they are incurred. Manufacturing overhead: January $22,050, February $26,250. These costs include depreciation of $1,575 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $15,750, February $21,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $12,600 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $26,250. The company wants to maintain a minimum monthly cash balance of $21,000. Prepare a cash budget for January and February.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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D2.
Account
Transcribed Image Text:Danner Company expects to have a cash balance of $47,250 on January 1, 2020. Relevant monthly budget data for the first 2
months of 2020 are as follows.
Collections from customers: January $89,250, February $157,500.
Payments for direct materials: January $52,500, February $78,750.
Direct labor: January $31,500, February $47,250. Wages are paid in the month they are incurred.
Manufacturing overhead: January $22,050, February $26,250. These costs include depreciation of $1,575 per month. All
other overhead costs are paid as incurred.
Selling and administrative expenses: January $15,750, February $21,000. These costs are exclusive of depreciation. They
are paid as incurred.
Sales of marketable securities in January are expected to realize $12,600 in cash. Danner Company has a line of credit at a
local bank that enables it to borrow up to $26,250. The company wants to maintain a minimum monthly cash balance of
$21,000.
Prepare a cash budget for January and February.
Transcribed Image Text:Beginning Cash Balance
Add: Receipts
Collections from Customers
Sale of Marketable Securities
Total Receipts
Total Available Cash
Less
Direct Materials
Direct Labor
Manufacturing Overhead
Disbursements
Selling and Administrative Expenses
Total Disbursements
Excess (Deficiency) of Available Cash Over Cash Disbursements
Financing
Add
Less
Borrowings
Repayments
Ending Cash Balance
>
<
+A
January
47250
89250
12600
28875
$
+A
Febru
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