Blossom Company expects to have a cash balance of $135,600 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows: . . Collections from customers: January $250,600, February $435,600. Payments for direct materials: January $159,500, February $242,200 Direct labor: January $90,600, February $132,400. Wages are paid in the month they are incurred. Manufacturing overhead: January $62,200, 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 $44,800, February $59,800. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $35,800 in cash. Blossom Company has a line of credit at the local bank that enables it to borrow up to $75,000. The company wants to maintain a minimum monthly cash balance of $60,400. ish Balance Receipts rom Customers ities le Cash Disbursements ials Cash Budget For the Months Ending February 2020 January 135600 February 69800 250600 435600 35800 286400 435600 505400 422000 159500 i 242200 90600 132400 i ng Overhead dministrative Expenses ements Sency) of Available Cash over Cash Disbursements Borrowings Repayments Including Interest Balance 159500 242200 i 90600 132400 i 57300 71600 44800 59800 i 352200 69800 506000 600 61000 0 69800 $ 60400 especially since their financial forecasts indicate some difficult economic periods in the coming year. March information has been budgeted as follows: Collections from customers: $375,600 Payments for direct materials: $207,300 Direct labor: Wages paid in March $116,800 Manufacturing overhead: $63,900. This includes the monthly depreciation of $4,900. Selling and administrative expenses: $51,000. This cost is exclusive of depreciation. Marketable securities of $51,200 can be sold if needed for additional cash. Prepare a cash budget for March assuming that the company does not sell the marketable securities. Blossom Company Cash Budget For the Month Ending March 2020 Beginning Cash Balance $ 60400 Beginning Cash Balance Add Receipts Collections from Customers Cash Budget For the Month Ending March 2020 Sale of Securities Total Receipts Total Available Cash Less Disbursements Direct Labor Direct Materials Manufacturing Overhead 60400 375600 0 375600 436000 116800 i 207300 59000 Direct Labor Direct Materials Manufacturing Overhead Selling and Administrative Expenses Total Disbursements Excess (Deficiency) of Available Cash over Cash Disbursements Financing Add Borrowings Less Repayments Including Interest Ending Cash Balance 110,800 207,300 59,000 i 51,000 434,100 1,900 14,000 15,900 Your answer is correct. What is the maximum amount the company can borrow during March? Maximum amount the company can borrow 14000 Does this provide the company with an adequate ending cash balance? Borrowing this amount does not provide Blossom Company with their minimum ending cash balance. eTextbook and Media Attempts: 3 of 5 used (b3) X Your answer is incorrect. How much does the company need to borrow if the marketable securities are sold? Company needs to borrow $ 51200