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Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are: January February Sales $350,000 $400,000 Direct materials purchases 120,000 110,000 Direct labor
Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are: January February Sales $350,000 $400,000 Direct materials purchases 120,000 110,000 Direct labor 85,000 112,000 Manufacturing overhead 60,000 75,000 Selling and administrative expenses 75,000 80,000 All sales are on account. Collections are expected to be 50% in the month of sale, 40% in the first month following the sale, and 10% in the second month following the sale. Thirty percent (30%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred. Depreciation has been excluded from manufacturing overhead and selling and administrative expenses. Other data: 1. Credit sales: November 2016, $200,000; December 2016, $280,000. 2. Purchases of direct materials: December 2013, $80,000. 3. Other receipts: JanuaryCollection of December 31, 2016, interest receivable $5,000; FebruaryProceeds from sale of securities $6,000. 4. Other disbursements: Februarypayment of $20,000 for land. The companys cash balance on January 1, 2017, is expected to be $50,000. The company wants to maintain a minimum cash balance of $40,000. Instructions Prepare a cash budget for January and February in columnar form.
Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are:
January February
Sales $350,000 $400,000
Direct materials purchases 120,000 110,000
Direct labor 85,000 112,000
Manufacturing overhead 60,000 75,000
Selling and administrative expenses 75,000 80,000
All sales are on account. Collections are expected to be 50% in the month of sale, 40% in the first month following the sale, and 10% in the second month following the sale. Thirty percent (30%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred. Depreciation has been excluded from manufacturing overhead and selling and administrative expenses.
Other data:
1. Credit sales: November 2016, $200,000; December 2016, $280,000.
2. Purchases of direct materials: December 2013, $80,000.
3. Other receipts: JanuaryCollection of December 31, 2016, interest receivable $5,000;
FebruaryProceeds from sale of securities $6,000.
4. Other disbursements: Februarypayment of $20,000 for land.
The companys cash balance on January 1, 2017, is expected to be $50,000. The company wants to maintain a minimum cash balance of $40,000.
Instructions
Prepare a cash budget for January and February in columnar form.
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