4. AJ Co. is projecting a cash balance of $30,000 in its beginning balance for t
ID: 2531233 • Letter: 4
Question
4. AJ Co. is projecting a cash balance of $30,000 in its beginning balance for the year. AJ’s schedule of expected collections from customers for the first quarter of 2014 shows total collections of $180,000. The schedule of expected payments for direct materials for the first quarter of 2014 shows total payments of $41,000. Other information gathered for the first quarter of 2014 is sale of equipment $3,000; direct labor $70,000, manufacturing overhead $35,000, selling and administrative expenses $45,000; and purchase of securities $14,000. AJ wants to maintain a balance of at least $25,000 cash at the end of each quarter. Prepare a cash budget for the first quarter.
AJ Co,
Cash Budget
For the Quarter Ended March 31, 2014
Beginning cash balance
30,000
Add: Receipts
Total Collections from customers
180,000
Sales of equipment
3000
Total receipts
183,000
Total available cash
Less: Disbursements
Direct materials
41,000
Direct labor
70,000
MOH
35,000
Selling and administrative expenses
45,000
Purchase of securities
14,000
Total disbursements
205,000
Excess of available cash over disbursements
Financing
Add: Borrowings
Less: Repayments
Ending cash balance
AJ Co,
Cash Budget
For the Quarter Ended March 31, 2014
Beginning cash balance
30,000
Add: Receipts
Total Collections from customers
180,000
Sales of equipment
3000
Total receipts
183,000
Total available cash
Less: Disbursements
Direct materials
41,000
Direct labor
70,000
MOH
35,000
Selling and administrative expenses
45,000
Purchase of securities
14,000
Total disbursements
205,000
Excess of available cash over disbursements
Financing
Add: Borrowings
Less: Repayments
Ending cash balance
Explanation / Answer
Answer
AJ Co,
Cash Budget
For the Quarter Ended March 31, 2014
Beginning cash balance
$ 30,000.00
Add: Receipts
Total Collections from customers
$ 1,80,000.00
Sales of equipment
$ 3,000.00
Total receipts
$ 1,83,000.00
Total available cash
$ 2,13,000.00
Less: Disbursements
Direct materials
$ 41,000.00
Direct labor
$ 70,000.00
MOH
$ 35,000.00
Selling and administrative expenses
$ 45,000.00
Purchase of securities
$ 14,000.00
Total disbursements
$ 2,05,000.00
Excess of available cash over disbursements [$213,000 – $205,000]
$ 8,000.00
Financing
Add: Borrowings [$25,000 – $8,000]
$ 17,000.00
Less: Repayments
Ending cash balance
$ 25,000.00
AJ Co,
Cash Budget
For the Quarter Ended March 31, 2014
Beginning cash balance
$ 30,000.00
Add: Receipts
Total Collections from customers
$ 1,80,000.00
Sales of equipment
$ 3,000.00
Total receipts
$ 1,83,000.00
Total available cash
$ 2,13,000.00
Less: Disbursements
Direct materials
$ 41,000.00
Direct labor
$ 70,000.00
MOH
$ 35,000.00
Selling and administrative expenses
$ 45,000.00
Purchase of securities
$ 14,000.00
Total disbursements
$ 2,05,000.00
Excess of available cash over disbursements [$213,000 – $205,000]
$ 8,000.00
Financing
Add: Borrowings [$25,000 – $8,000]
$ 17,000.00
Less: Repayments
Ending cash balance
$ 25,000.00
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