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

Question

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

Cash balance, March 1 $ 18,120

Collections from customers 42,500

Paid to suppliers 23,500

Manufacturing overhead 7,300

Direct labor 8,850

Selling and administrative expenses 5,400

Walter pays all expenses in the month incurred. Manufacturing overhead includes $1,800 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 $8,200 during March. Walter can borrow in increments of $1,000 and would like to maintain a minimum cash balance of $12,000.

Required: Prepare Walter’s cash budget for the month of March.

Explanation / Answer

Answer:-

Walter's Cash Budget for the month of March Particluars Amount $ Opening cash balance 18120 Cash collections:- Collection from customers 42500 Total cash available (A) 60620 Cash payments:- Paid to suppliers 23500 Manufaturing Overhead 7300 Less:- Depreciation 1800 5500 Direct Labor 8850 Selling & administrative expense 5400 Property puchase 8200 Total cash payments (B) 51450 Cash Balance C=(A-B) 9170 Borrowing Amount 3000 Closing cash balance 12170

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