Blueline Printing\'s board of directors was presented with the following informa
ID: 2572226 • Letter: B
Question
Blueline Printing's board of directors was presented with the following information about operations for an upcoming three-month period. The board desires to declare a dividend at the end of June, but still maintain cash on hand of $350,000. Blueline began April with $78,000 of cash on hand. Prepare a cash budget, and determine how much cash will be available for the dividend.
April May June
April
May
June
Customer receipts
$750,000
$780,000
$820,000
Cash paid for direct materials
220,000
225,000
270,000
Cash paid for direct labor
250,000
270,000
350,000
Factory overhead*
150,000
150,000
158,000
SG&A**
88,000
90,000
85,000
Taxes
17,000
19,000
17,000
Equipment purchase***
500,000
* Includes monthly depreciation of $100,000
** Includes monthly depreciation of $25,000
*** Equipment purchase to be paid for in July
Available for dividend
$94,000
Available for dividend
$95,000
Available for dividend
$96,000
Available for dividend
$97,000
Available for dividend
$98,000
None of the above
April
May
June
Customer receipts
$750,000
$780,000
$820,000
Cash paid for direct materials
220,000
225,000
270,000
Cash paid for direct labor
250,000
270,000
350,000
Factory overhead*
150,000
150,000
158,000
SG&A**
88,000
90,000
85,000
Taxes
17,000
19,000
17,000
Equipment purchase***
500,000
* Includes monthly depreciation of $100,000
** Includes monthly depreciation of $25,000
*** Equipment purchase to be paid for in July
Explanation / Answer
Cash budget April May june cash opening balance 78,000 228,000 379,000 Cash receipt 750,000 780,000 820,000 total cash receipts 828,000 1,008,000 1,199,000 Cash disbursement cash paid for direct materials 220,000 225,000 270,000 cash paid for direct labor 250,000 270,000 350,000 factory overhead 50,000 50,000 58,000 SG&A 63000 65000 60000 Taxes 17,000 19,000 17,000 Equipment purchase 0 total disbursement 600,000 629,000 755,000 excess 228,000 379,000 444,000 since excess in june is 444,000 cash balance to be maintained 350,000 Dividend to be declared 94,000 option A is the answer