Exercise 9-14 (Video)

Danner Company expects to have a cash balance of $45,000 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows.

Collections from customers: January $85,000, February $150,000.

Payments for direct materials: January $50,000, February $75,000.

Direct labor: January $30,000, February $45,000. Wages are paid in the month they are incurred.

Manufacturing overhead: January $21,000, February $25,000. These costs include depreciation of $1,500 per month. All other overhead costs are paid as incurred.

Selling and administrative expenses: January $15,000, February $20,000. These costs are exclusive of depreciation. They are paid as incurred.

Sales of marketable securities in January are expected to realize $12,000 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $20,000. Prepare a cash budget for January and February. DANNER COMPANY Cash Budget

For the Quarter Ending February 28, 2020For the Two Months Ending February 28, 2020February 28, 2020

January

February

Direct MaterialsCollections from CustomersBeginning Cash BalanceFinancingRepaymentsDirect LaborManufacturing OverheadDisbursementsBorrowingsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsReceiptsSale of Marketable SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal Receipts

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Collections from CustomersDirect LaborTotal DisbursementsDirect MaterialsTotal Available CashSale of Marketable SecuritiesSelling and Administrative ExpensesDisbursementsTotal ReceiptsBorrowingsRepaymentsReceiptsManufacturing OverheadFinancingEnding Cash BalanceBeginning Cash BalanceExcess (Deficiency) of Available Cash Over Cash Disbursements

Financing Excess (Deficiency) of Available Cash Over Cash Disbursements Total Disbursements Selling and Administrative Expenses Manufacturing Overhead Receipts Repayments Disbursements Ending Cash Balance Sale of Marketable Securities Total Available Cash Total Receipts Beginning Cash Balance Borrowings Collections from Customers Direct Labor Direct Materials

Total Available Cash Direct Materials Collections from Customers Disbursements Direct Labor Sale of Marketable Securities Ending Cash Balance Excess (Deficiency) of Available Cash Over Cash Disbursements Manufacturing Overhead Financing Total Disbursements Receipts Repayments Total Receipts Selling and Administrative Expenses Beginning Cash Balance Borrowings

Receipts Repayments Total Available Cash Manufacturing Overhead Beginning Cash Balance Sale of Marketable Securities Total Receipts Financing Borrowings Total Disbursements Selling and Administrative Expenses Collections from Customers Direct Labor Direct Materials Disbursements Ending Cash Balance Excess (Deficiency) of Available Cash Over Cash Disbursements

Total ReceiptsManufacturing OverheadDirect LaborExcess (Deficiency) of Available Cash Over Cash DisbursementsReceiptsDisbursementsEnding Cash BalanceBeginning Cash BalanceRepaymentsBorrowingsFinancingSale of Marketable SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsDirect MaterialsCollections from Customers

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Sale of Marketable SecuritiesTotal ReceiptsDirect LaborSelling and Administrative ExpensesDirect MaterialsFinancingRepaymentsBeginning Cash BalanceDisbursementsTotal Available CashExcess (Deficiency) of Available Cash Over Cash DisbursementsCollections from CustomersManufacturing OverheadTotal DisbursementsEnding Cash BalanceBorrowingsReceipts

Sale of Marketable Securities Collections from Customers Receipts Total Receipts Direct Labor Selling and Administrative Expenses Direct Materials Beginning Cash Balance Excess (Deficiency) of Available Cash Over Cash Disbursements Financing Total Available Cash Manufacturing Overhead Repayments Disbursements Ending Cash Balance Total Disbursements Borrowings

Collections from Customers Selling and Administrative Expenses Manufacturing Overhead Total Receipts Direct Materials Direct Labor Repayments Total Available Cash Receipts Sale of Marketable Securities Disbursements Beginning Cash Balance Borrowings Ending Cash Balance Total Disbursements Excess (Deficiency) of Available Cash Over Cash Disbursements Financing

Excess (Deficiency) of Available Cash Over Cash Disbursements Sale of Marketable Securities Total Available Cash Disbursements Direct Materials Borrowings Ending Cash Balance Collections from Customers Financing Selling and Administrative Expenses Direct Labor Total Disbursements Manufacturing Overhead Total Receipts Receipts Beginning Cash Balance Repayments

Financing Disbursements Manufacturing Overhead Direct Labor Borrowings Receipts Repayments Total Receipts Ending Cash Balance Excess (Deficiency) of Available Cash Over Cash Disbursements Selling and Administrative Expenses Sale of Marketable Securities Total Available Cash Total Disbursements Beginning Cash Balance Direct Materials Collections from Customers

Total Receipts Selling and Administrative Expenses Receipts Total Disbursements Disbursements Manufacturing Overhead Financing Ending Cash Balance Sale of Marketable Securities Excess (Deficiency) of Available Cash Over Cash Disbursements Beginning Cash Balance Repayments Borrowings Total Available Cash Collections from Customers Direct Labor Direct Materials

Total Available CashManufacturing OverheadDisbursementsDirect LaborFinancingTotal DisbursementsReceiptsBeginning Cash BalanceTotal ReceiptsDirect MaterialsBorrowingsCollections from CustomersEnding Cash BalanceRepaymentsExcess (Deficiency) of Available Cash Over Cash DisbursementsSale of Marketable SecuritiesSelling and Administrative Expenses

Beginning Cash BalanceDirect LaborTotal ReceiptsEnding Cash BalanceBorrowingsDisbursementsCollections from CustomersDirect MaterialsReceiptsRepaymentsSale of Marketable SecuritiesExcess (Deficiency) of Available Cash Over Cash DisbursementsSelling and Administrative ExpensesFinancingManufacturing OverheadTotal Available CashTotal Disbursements

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Direct LaborTotal ReceiptsExcess (Deficiency) of Available Cash Over Cash DisbursementsBeginning Cash BalanceDisbursementsDirect MaterialsSelling and Administrative ExpensesRepaymentsTotal Available CashReceiptsManufacturing OverheadTotal DisbursementsBorrowingsFinancingSale of Marketable SecuritiesCollections from CustomersEnding Cash Balance

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RepaymentsTotal DisbursementsTotal ReceiptsSelling and Administrative ExpensesBeginning Cash BalanceDirect LaborDirect MaterialsReceiptsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsManufacturing OverheadSale of Marketable SecuritiesFinancingTotal Available CashBorrowingsCollections from Customers

Collections from CustomersTotal Available CashDirect LaborEnding Cash BalanceDirect MaterialsDisbursementsExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingRepaymentsTotal ReceiptsManufacturing OverheadReceiptsSale of Marketable SecuritiesSelling and Administrative ExpensesTotal DisbursementsBeginning Cash BalanceBorrowings

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