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melomori [17]
2 years ago
10

Danner Company expects to have a cash balance of $51,300 on January 1, 2020. Relevant monthly budget data for the first 2 months

of 2020 are as follows. Collections from customers: January $96,900, February $171,000. Payments for direct materials: January $57,000, February $85,500. Direct labor: January $34,200, February $51,300. Wages are paid in the month they are incurred. Manufacturing overhead: January $23,940, February $28,500. These costs include depreciation of $1,710 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $17,100, February $22,800. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $13,680 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $28,500. The company wants to maintain a minimum monthly cash balance of $22,800. Prepare a cash budget for January and February.
Business
1 answer:
Nookie1986 [14]2 years ago
7 0

Answer:

Danner Company

Danner Company

Cash Budget

                                               January       February

Beginning Balance                 $51,300        $31,350

Collections from customers:  96,900         171,000

Sale of marketable securities 13,680

Total cash receipts              $161,880     $202,350

Payments:

Direct materials:                   $57,000       $85,500

Direct labor:                            34,200          51,300

Manufacturing overhead:      22,230         26,790

Selling & Administrative:         17,100          22,800

Total payments                  $130,530      $186,390

Cash Balance                       $31,350        $15,960

Minimum cash balance         22,800         22,800

Excess cash (deficit)             $8,550         ($6,840)

Explanation:

a) Data and Calculations:

Expected Cash balance on January 1, 2020 = $51,300

Collections from customers:

January   $96,900

February $171,000

Payments for direct materials:

January $57,000

February $85,500

Direct labor:

January $34,200

February $51,300

Manufacturing overhead:

January $23,940 - depreciation of $1,710 Net $22,230

February $28,500 - depreciation of $1,710 Net $26,790

Selling and administrative expenses:

January $17,100

February $22,800

Sales of Marketable securities in January = $13,680

Line of credit = $28,500

Expected monthly minimum cash balance = $22,800

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7 0
3 years ago
The following transactions occurred during July: Received $1,050 cash for services provided to a customer during July. Received
Anastasy [175]

Answer:

$1,575

Explanation:

We will clasify the item "revenue" or "not":

  1. Received $1,050 cash for services provided to a customer during July -> yes, this is revenue
  2. Received $5,000 cash investment from Bob Johnson :  not revenue
  3. the owner of the business Received $900 from a customer in partial payment of his account receivable which arose from sales in June: not revenue for July, but June which was booked in June revenue already
  4. Provided services to a customer on credit, $525: yes, this is July revenue though it's still on account receivable
  5. Borrowed $7,500 from the bank by signing a promissory note: not revenue
  6. Received $1,400 cash from a customer for services to be rendered next year: not July revenue, it's customer advace and might be next year revenue once services are completed

So the amount of revenue for July = Received $1,050 cash for services provided to a customer during July + Provided services to a customer on credit, $525

= $1,050 +$525

=  $1,575

4 0
3 years ago
The following are the income statements of the Hancock Company for two consecutive years. Increases in which expenses contribute
dsp73

Answer:

Increase in Administrative Expense of $3,300 additional led to loss in the year 2016.

Explanation:

As for the provided details:

Particulars                2016             2015

Revenue                 $30,000         $20,000

Cost of goods sold  $17,800        $12,000

Gross margin          $12,200         $8,000

Operating Exp        

Selling Exp             $4,800            $4,600

Admin. Exp             $7,800            $3,000

Total operating exp $12,600         $7,600

Net Income              ($400)            $400

As we see the major difference which is irrelevant is in administration expense, that is because difference in cost of goods sold is somewhere justified as, when it calculated as a percentage of sale that is $12,000/$20,000 = 60%

Thus for year 2016 also the expense shall be $30,000 \times 60% = $18,000

Thus, it is justified but for administrative expense $3,000/$20,000 = 15%

For 2016 = $30,000 \times 15% = $4,500

But since it is very much exaggerated, by $7,800 - $4,500 = $3,300 this is the main reason of loss.

5 0
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