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26 December, 10:21

Blue Corporation is projecting a cash balance of $36,450 in its December 31, 2016, balance sheet. Blue's schedule of expected collections from customers for the first quarter of 2017 shows total collections of $224,775. The schedule of expected payments for direct materials for the first quarter of 2017 shows total payments of $52,245. Other information gathered for the first quarter of 2017 is sale of equipment $3,645; direct labor $85,050, manufacturing overhead $42,525, selling and administrative expenses $54,675; and purchase of securities $17,010. Blue wants to maintain a balance of at least $30,375 cash at the end of each quarter.

Prepare a cash budget for the first quarter.

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  1. 26 December, 10:59
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    Answer and Explanation:

    The Preparation of cash budget for the first quarter is following below:-

    Cash Budget

    Particulars Amount

    Cash balance Beginning $36,450

    Add: Receipts

    Total Collection $224,775

    Sale of equipment $3,645

    Total receipts $228,420

    Total cash available $265,870

    Less: Disbursements

    Direct material $52,245

    Direct labor $85,050

    Manufacturing overhead $42,525

    Selling and

    administrative overhead $54,675

    Purchase of securities $17,010

    Total Disbursements $251,535

    Available excess available

    cash over disbursements $14,335

    Financing

    Add: Purchase of securities $17,010

    Less: Repayments -

    Cash balance at ending $31,345

    So, to reach at ending balance we simply added the purchase of securities and ending cash balance.
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