Chapter 22

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Question 11 Your answer is partially correct. Try again. Carla Vista Company expects to have a cash balance of $54,000 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows. Collections from customers: January $102,000, February $180,000. Payments for direct materials: January $60,000, February $90,000. Direct labor: January $36,000, February $54,000. Wages are paid in the month they are incurred. Manufacturing overhead: January $25,200, February $30,000. These costs include depreciation of $1,800 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $18,000, February $24,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $14,400 in cash. Carla Vista Company has a line of credit at a local bank that enables it to borrow up to $30,000. The company wants to maintain a minimum monthly cash balance of $24,000. Prepare a cash budget for January and February. CARLA VISTA COMPANY Cash Budget For the Two Months Ending February 28, 2020 January February Beginning Cash Balance Add 4 Receipts Collections from Customers Disbursements Total Receipts Total Available Cash Less X Ending Cash Balance A Financing Add - Borrowings Less Repayments Ending Cash Balance Repayments Excess (Deficiency) of Available Cash Over Cash Disbursements Selling and Administrative Expenses Borrowings Financing Manufacturing Overhead Receipts Collections from Customers Sale of Marketable Securities Direct Labor Total Available Cash Direct Materials Total Disbursements Disbursements Ending Cash Balance Total Receipts Beginning Cash Balance