Singh Company prepares monthly cash budgets. Relevant data from operating budgts
ID: 2358104 • Letter: S
Question
Singh Company prepares monthly cash budgets. Relevant data from operating budgts for 2013 are: January February Sales $350,000 $400,000 Direct materials purchases $110,000 $130,000 Direct labor $90,000 $100,000 Manufacturing overhead $70,000 $75,000 Selling and administrative expenses $79,000 $86,000 All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) 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 except for selling and administrative expenses that include $1,000 of depreciation per month. Other data: 1. Credit sales: November 2012, $260,000; December 2012, $320,000. 2. Purchases of direct materials: December 2012, $100,000 3. Other receipts: January- Collection of December 31, 2012, notes receivable $15,000; February- Proceeds from sale of securities $6,000. 4. Other disbursements: February- Withdrawal of $5,000 cash for personal use of owner, Dwight Yocum The companyExplanation / Answer
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(b) =
Cash Budget
For the Two Months Ending February 28, 2013
January
February
Beginning cash balance......................................................
Add: Receipts
Collections from customers............................
[See Schedule (1)]
Notes receivable..................................................
Sale of securities..................................................
Total receipts...............................................
Total available cash...............................................................
$ 60,000
323,000
15,000
338,000
398,000
$ 54,000
369,000
6,000
375,000
429,000
Less: Disbursements
Direct materials.................................................
[See Schedule 2]
Direct labor.......................................................
Manufacturing overhead.................................
Selling and administrative
expenses*.......................................................
Withdrawal by owner......................................
Total disbursements..................................
Excess (deficiency) of available cash
over cash disbursements...................................................
Financing
Borrowings.................................................................
Repayments................................................................
Ending cash balance.............................................................
106,000
90,000
70,000
78,000
344,000
54,000
0
0
$ 54,000
122,000
100,000
75,000
85,000
5,000
387,000
42,000
8,000
0
$ 50,000
January
February
Beginning cash balance......................................................
Add: Receipts
Collections from customers............................
[See Schedule (1)]
Notes receivable..................................................
Sale of securities..................................................
Total receipts...............................................
Total available cash...............................................................
$ 60,000
323,000
15,000
338,000
398,000
$ 54,000
369,000
6,000
375,000
429,000
Less: Disbursements
Direct materials.................................................
[See Schedule 2]
Direct labor.......................................................
Manufacturing overhead.................................
Selling and administrative
expenses*.......................................................
Withdrawal by owner......................................
Total disbursements..................................
Excess (deficiency) of available cash
over cash disbursements...................................................
Financing
Borrowings.................................................................
Repayments................................................................
Ending cash balance.............................................................
106,000
90,000
70,000
78,000
344,000
54,000
0
0
$ 54,000
122,000
100,000
75,000
85,000
5,000
387,000
42,000
8,000
0
$ 50,000