Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process. 113,000 101,000 114,000 Sales Unit sales for November 2019 Unit sales for December 2019 Expected unit sales for January 2020 Expected unit sales for February 2020 Expected unit sales for March 2020 Expected unit sales for April 2020 Expected unit sales for May 2020 Unit selling price 114,000 117,000 124,000 139,000 $12 Waterways likes to keep 10% of the next month's unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2019, totaled $181,800. Direct Materials Direct materials cost 80 cents per pound. Two pounds of direct materials are required to produce each unit. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Raw Materials on December 31, 2019, totaled 11,400 pounds. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable on December 31, 2019, totaled $102,885. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $9 per hour. 300 Manufacturing Overhead Indirect materials Indirect labor 500 Utilities 500 Maintenance 200 per labor hour per labor hour per labor hour per labor hour per month per month per month Salaries $43,000 $16.900 $2,900 Depreciation Property taxes Insurance Maintenance $1,100 per month $1,400 per month Selling and Administrative Variable selling and administrative cost per unit is $1.50. Advertising $17,000 a month Insurance $1,200 a month Salaries $72,000 a month Depreciation $2,400 a month Other fixed costs $2,800 a month Other Information The Cash balance on December 31, 2019, totaled $99,000, but management has decided it would like to maintain a cash balance of at least $800.000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.70 per share for 4.850 shares outstanding. The company has an open line of credit with Romney's Bank. The terms of the agreement requires borrowing to be in $1.000 increments at 9% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $480.000 equipment purchase is planned for February. For the first quarter of 2020, prepare a cash budget. (Round answers to O decimal places, e.g. 2,520.) WATERWAYS CORPORATION Cash Budget For the First Quarter of 2020 First Quarter January Beginning Cash Balance $ $ 99000 TA Add Receipts Collections From Customers 1344600 Total Available Cash 1443600 Less Disbursements Direct Materials 194097 i UU Direct Labor 205200 1 Manufacturing Overhead -99500 Selling And Administrative 266400 Equipment Purchase Dividends 13095 Total Disbursements Excess (Deficiency) Of Available Cash Over Cash Disbursements Financing 11 Add V: Borrowings WATERWAYS CORPORATION Cash Budget For the First Quarter of 2020 First Quarter January February March Quarter 99000 TA 800308 $ 920695 $ 99000 1344600 1368000 1398600 4111200 1443600 2168308 2168308 4210200 194097 1 205200 -99500 266400 DOIDOIA DOIDONDA 13095 i Total Available Cash 1443600 Less Disbursements Direct Materials 194097 i Direct Labor 205200 1 Manufacturing Overhead -99500 Selling And Administrative 266400 Equipment Purchase Dividends > 13095 Total Disbursements Excess (Deficiency) Of Available Cash Over Cash Disbursements Financing Add : Borrowings Less Repayments Interest 1 Ending Cash Balance 9 1443600 2168308 2168308 4210200 194097 205200 NOD -99500 266400 13095 JOINDICO ON DINDINTI I OTTE i $ $
