Question
The January 1, 2019 cash balance is expected to be $38,000. The company wishes to maintain a balance of at least $15,000. Sales are collected
The January 1, 2019 cash balance is expected to be $38,000.
The company wishes to maintain a balance of at least $15,000.
Sales are collected 60% in the quarter sold and 40% are collected in the following quarter.
A/R of $60,000 at December 31, 2018 are expected to be collected in full in the first quarter of 2019.
Sales: Q1= $180,000Q2= $210,000Q3= $240,000Q4= $170,000
Short-term investments are expected to be sold for $2,000 cash in the first quarter.
Direct materials are paid 50% in the quarter purchased and 50% paid for in the following quarter.
A/P of $10,600 at December 31, 2018 are expected to be paid in full in the first quarter of 2019
Direct materials purchase:Q1= $25,200Q2= $29,200Q3= $33,200Q4= $37,200
Direct labour is paid in quarter incurred:
Q1= $62,000Q2= $72,000Q3= $82,000Q4= $92,000
Manufacturing overhead except depreciation:
Q1= $53,300Q2= $56,300Q3= $59,300Q4= $62,300
and selling and administrative expenses are paid in the quarter incurred:
Q1= $41,000Q2= $43,000Q3= $45,000Q4= $47,000
Management plans to purchase a truck in the second quarter for $10,000
The company makes equal quarterly payments of the estimated annual income taxes ($12,000)
Loans are repaid in the earliest quarter in which there is sufficient cash (that is when the cash on hand exceeds the $15,000 minimum required balance). Since there is an excess of available cash, the borrowing plus $100 interest is repaid in the third quarter.
- Based on all these assumptions, how i can prepare cash budget by quarters for 2019.
- and In preparing the cash budget, how to prepare schedules for collections from customers and cash payments for direct materials.
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