Danner Company expects to have a cash balance of $53,100 on January 1, 2020. Relevant monthly budget data for the first 2 months

Question

3 years ago

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Danner Company expects to have a cash balance of $53,100 on January 1, 2020. Relevant monthly budget data for the first 2 months

of 2020 are as follows.
Collections from customers: January $100,300, February $177,000.
Payments for direct materials: January $59,000, February $88,500.
Direct labor: January $35,400, February $53,100. Wages are paid in the month they are incurred.
Manufacturing overhead: January $24,780, February $29,500. These costs include depreciation of $1,770 per month. All other overhead costs are paid as incurred.
Selling and administrative expenses: January $17,700, February $23,600. These costs are exclusive of depreciation. They are paid as incurred.

Sales of marketable securities in January are expected to realize $14,160 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $29,500. The company wants to maintain a minimum monthly cash balance of $23,600.

Required:
Prepare a cash budget for January and February.

Business