a) Martin Company expects to have a cash balance of $136,300 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows:

		Collections from customers: January $242,600, February $438,600.
		Payments for direct materials: January $154,500, February $239,900
		Direct labor: January $88,800, February $135,100. Wages are paid in the month they are incurred.
		Manufacturing overhead: January $63,000, February $76,500. These costs include depreciation of $4,900 per month. All other overhead costs are paid as incurred.
		Selling and administrative expenses: January $45,100, February $61,000. These costs are exclusive of depreciation. They are paid as incurred.
		Sales of marketable securities in January are expected to realize $36,100 in cash. Martin Company has a line of credit at the local bank that enables it to borrow up to $73,500. The company wants to maintain a minimum monthly cash balance of $60,500.

b)

Martin Companys chief financial officer feels that it is important to have data for the entire quarter especially since their financial forecasts indicate some difficult economic periods in the coming year. March information has been budgeted as follows:

		Collections from customers: $381,000
		Payments for direct materials: $213,400
		Direct labor: Wages paid in March $113,700
		Manufacturing overhead: $65,700. This includes the monthly depreciation of $4,900.
		Selling and administrative expenses: $51,900. This cost is exclusive of depreciation.
		Marketable securities of $53,100 can be sold if needed for additional cash.

Prepare a cash budget for March assuming that the company does not sell the marketable securities.

Your answer is correct. Prepare a cash budget for January and February. Martin Company Cash Budget For the Months Ending February 2020 February 136300 68500 Beginning Cash Balance Add 4: Receipts Collections from Customers Sale of Securities Total Receipts 242600 438600 36100 278700 438600 415000 507100 la (154500) (239900) i Total Available Cash Less : Disbursements Direct Materials Direct Labor Manufacturing Overhead Selling and Administrative Expenses Total Disbursements (135100) i (88800) (58100) i (45100) i (71600) i (61000) i (346500) (507600) i 68500 (500) Excess (Deficiency) of Available Cash over Cash Disbursements Financing Add : Borrowings Less 9 : Repayments including Interest Ending Cash Balance 61000 0 68500 60500 eTextbook and Media Martin Company Cash Budget For the Month Ending March 2020 Beginning Cash Balance Add : Receipts Collections from Customers 381000 Sale of Securities Total Receipts Total Available Cash Less : Disbursements Direct Materials Direct Labor Manufacturing Overhead 213400 113700 60800 i Selling and Administrative Expenses 51900 Total Disbursements 439800 Excess (Deficiency of Available Cash over Cash Disbursements Financing Add Less : Borrowings : Repayments including Interest Ending Cash Balance