Deitz Corporation is projecting a cash balance of $41,580 in its December 31, 20

Question

Deitz Corporation is projecting a cash balance of $41,580 in its December 31, 2016, balance sheet. Deitz's schedule of expected collections from customers for the first quarter of 2017 shows total collections of $256,410. The schedule of expected payments for direct materials for the first quarter of 2017 shows total payments of $59,598. Other information gathered for the first quarter of 2017 is sale of equipment $4,158; direct labor $97,020, manufacturing overhead $48,510, selling and administrative expenses $62,370; and purchase of securities $19,404. Deitz wants to maintain a balance of at least $34,650 cash at the end of each quarter. Prepare a cash budget for the first quarter. (Do not leave any answer field blank. Enter O for amounts.) DEITZ CORPORATION Cash Budget

Explanation / Answer

Cash Budget

Beginning cash balance in first quarter of 2017 : $41580

Add: Budgeted cash receipts :

Collections from customers : $256410

Sale of equipment $4158

Total cash available for use $302148

Less: Cash disbursements:

Direct Material $ 59598

Direct labour $ 97020

Manufactiring overhead $ 48510

Selling & administrative expenses $62370

Total disbursements $267498

Cash balance at the end of first quarter $34650

Deitz corporation should defer the purchase of securities of $19404 to other quarters because the cash balance has reached to the minimum required of $ 34650.

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