Danner Company expects to have a cash balance of $45,000 on January 1, 2025. Relevant monthly budget

Question:

Danner Company expects to have a cash balance of $45,000 on January 1, 2025. Relevant monthly budget data for the first 2 months of 2025 are as follows.
Collections from customers: January $85,000, February $150,000.
Payments for direct materials: January $50,000, February $75,000.
Direct labor: January $30,000, February $45,000. Wages are paid in the month they are incurred.
Manufacturing overhead: January $21,000, February $25,000. These costs include depreciation of $1,500 per month. All other overhead costs are paid as incurred.
Selling and administrative expenses: January $15,000, February $20,000. These costs are exclusive of depreciation. They are paid as incurred.
Sales of marketable securities in January are expected to realize $12,000 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $20,000.


Instructions
Prepare a cash budget for January and February.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Accounting Tools For Business Decision Making

ISBN: 9781119791058

8th Edition

Authors: Paul D. Kimmel,  Jerry J. Weygandt,  Jill E. Mitchell

Question Posted: