Prepare a cash budet for 2. Jake Company expects to have a cash balance of $45,0
ID: 2572254 • Letter: P
Question
Prepare a cash budet for 2. Jake Company expects to have a cash balance of $45,000 on January 1, 2017. Relevant 2 months (LO 4) monthly budget data for the first 2 months of 2017 are as follows. Collections from customers: January $100,000. February $160,000 Payments for direct materials: January $60,000, February $80,000. Direct labor: January $30,000, February $45,000. Wages are paid in the month they are incurred Manufacturing overhead: January $26,000, February $31,000. These costs include depre ciation of $1,000 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $15,000. February $20,000. These costs ar exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $10,000 in cash. Jak Company has a line of credit at a local bank that enables it to borrow up to $25,000. Th company wants to maintain a minimum monthly cash balance of $25,000.Explanation / Answer
Jake Company Cash Budget For the months of January and February 2017 January February Beginning cash balance 45000 25000 Add: Collections from customers 100000 160000 Sale of marketable securities 10000 0 Total cash available 155000 185000 Less cash disbursements: Payments for direct materials 60000 80000 Direct labor 30000 45000 Manufacturing overhead 25000 30000 Selling and administrative expenses 15000 20000 Total cash disbursements 130000 175000 Excess (deficiency) of cash available over disbursements 25000 10000 Financing: Borrowings 0 15000 Repayments 0 0 Interest 0 0 Total financing 0 15000 Ending cash balance 25000 25000