4. Yancey has $13,000 in cash on hand on January 1 and has collected the following budget data: (Click on the icon to view the budget data.) Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Yancey has cash payments for selling and administrative expenses including salaries of $50,000 per month plus commissions that are 1% of sales, all paid in the month of sale. The company requires a minimum cash balance of $15,000. Prepare a cash budget for January and February. Round to the nearest dollar. Will Yancey need to borrow cash by the end of February? Begin by preparing the cash budget for January, then prepare the cash budget for February (Complete all input fields. Enter a "0" for any zero balances. Round all amounts entered into the cash budget to the nearest whole dollar.) Begin by preparing the cash budget for January, then prepare the cash budget for February. (Complete all input fields. Enter a "0" for any zero balances. Round all amounts entered into the cas to the nearest whole dollar.) Yancey Company Cash Budget Two Months Ended January 31 and February 28 January February 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 Will Yancey need to borrow cash by the end of February? Yancey (1) need to borrow cash by the end of February because the ending cash balance before financing is (2) than the minimum cash balance required. 1: Data Table January February $ 525,000 $ 566,000 Sales 442,100 502, 100 180,278 Cash receipts from customers Cash payments for direct materials purchases Direct labor costs Manufacturing overhead costs (includes depreciation of $1,100 per month) 160,892 113,192 135, 130 55,366 53,878 Arete Company expects to sell 4,000 units for $180 each for a total of $720,000 in January and 5,000 units for $205 each for a total of $1,025,000 in February. The company expects cost of goods sold to average 70% of sales revenue, and the company expects to sell 4,600 units in March for $260 each. Arete's target ending inventory is $10,000 plus 50% of the next month's cost of goods sold. Prepare Arete's inventory, purchases, and cost of goods sold budget for January and February February Arete Company Inventory, Purchases, and Cost of Goods Sold Budget Two months Ended January 31 and February 28 January Cost of goods sold Plus: Desired ending merchandise inventory Total merchandise inventory required Less: Beginning merchandise inventory Budgeted purchases
