Question

Deitz Corporation is projecting a cash balance of $30,600 in its December 31, 2019, balance sheet. Deitz’s schedule of expected collections from customers for the first quarter of 2020 shows total collections of $188,700. The schedule of expected payments for direct materials for the first quarter of 2020 shows total payments of $43,860. Other information gathered for the first quarter of 2020 is sale of equipment $3,060; direct labor $71,400, manufacturing overhead $35,700, selling and administrative expenses $45,900; and purchase of securities $14,280. Deitz wants to maintain a balance of at least $25,500 cash at the end of each quarter.
Required:

Prepare a cash budget for the first quarter.

Answer 1

Answer:

Cash Budget for the First Quarter.

Total Receipts :

Collections From Customers                          $188,700

Sale of Equipment                                              $3,060

                                                                          $191,760

Total Payments :

Direct materials                                                $43,860

Direct labor                                                        $71,400

Manufacturing overhead                                 $35,700

Selling and administrative expenses             $45,900

Purchase of securities                                      $14,280

                                                                        $210,840

Net Receipts / (Payments)                              ($19,080)

Opening Balance                                            $30,600

Closing Balance                                                $11,520

Required Balance                                            $25,500

Loan (Shortfall)                                                  $14,250

Explanation:

A cash budget shows a future estimate of future cash incomes and cash expenditures.