Answer:
Deitz Corporation Cash budget for first Quarter of 2020
Amount in $ Amount in $
Expected opening balance 32,100
<u>Projected cash inflows:</u>
Collections from customers 197,950
Sale of equipment 3,210
Total cash inflows 201,160
<u>Projected cash outflows:</u>
Payments for direct materials (46,010)
Direct labor (74,900)
Manufacturing overheads (37,450)
Selling and admin. expenses (48,150)
Purchase of securities (14,980)
Total cash outflows <u> (221,490)</u>
Expected cash balance <u> 11,770 </u>
Difference between expected balance and desired balance at the end of each quarter
= $26,750 - $11,770
= $14,980
This means that for Deitz Corporation to maintain a minimum balance $26,750 at the end of the first quarter, the purchase of securities may be suspended till the next quarter.
Explanation:
The cash budget is one that shows projects made by management on the expected inflows and outflows of cash for a given period. This usually begins with the opening cash balance, followed by the expected inflows, then the outflows and the net of all gives the closing cash balance.