Alpha Corporation is projecting a cash balance of $40,000 in its December 31, 20

Question

Alpha Corporation is projecting a cash balance of $40,000 in its December 31, 2009, balance sheet. Alpha’s schedule of expected collections from customers for the first quarter of 2010 shows total collections of $200,000. The schedule of expected payments for direct materials for the first quarter of 2010 shows total payments of $50,000. Other information gathered for the first quarter of 2010 is: sale of equipment $8,000; direct labor $70,000, manufacturing overhead $30,000, selling and administrative expenses $50,000; and purchase of securities $15,000. Alpha wants to maintain a balance of at least $45,000 cash at the end of each quarter. Complete a Cash Budget

Explanation / Answer

CALCULATION OF THE CASH BUDGET Particulars Amount Amount Opening Balance $               40,000 Cash Collection from Customer $           2,00,000 Sale of Equipment $                 8,000 Total Cash Available $           2,48,000 Less: Payments Against the purchase of Direct Material $               50,000 Againt the Direct Labour $               70,000 Manufacturing Overhead $               30,000 Selling and administration Expenses $               50,000 Purchase of Securities $               15,000 Total Cash Expenses $           2,15,000 Net Cash Balance after Expenes $               33,000 Cash Balance need to Maintain = $               45,000 Difference is need to take the finance from outside $             -12,000

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