Walter Company has the following information for the month of March: Walter pays

Question

Walter Company has the following information for the month of March:

Walter pays all expenses in the month incurred. Manufacturing overhead includes $1,400 for machinery depreciation, but the amount for selling and administrative expenses is exclusive of depreciation. Additionally, Walter also expects to buy a piece of property for $7,400 during March. Walter can borrow in increments of $1,000 and would like to maintain a minimum cash balance of $10,000.
   
Required:
Prepare Walter’s cash budget for the month of March.

Cash balance, March 1 $ 16,920 Collections from customers 38,450 Paid to suppliers 22,700 Manufacturing overhead 6,500 Direct labor 8,450 Selling and administrative expenses 4,600

Explanation / Answer

Cash budget :

Beginning cash balance 16920 Budgeted Cash Receipts 38450 Budgeted Cash Payments 48250 Preliminary Cash Balance 7120 Cash Borrowed 3000 Ending cash balance 10120

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