Vaughn Company prepares monthly cash budgets. Relevant data from operating budgets for 2025 are as follows. Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses Other data: 1. 2. 3. January February $446,400 $496,000 148,800 4. 111,600 86,800 All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and administrative expenses that include $1,240 of depreciation per month. 97,960 155,000 124,000 93,000 105,400 Credit sales: November 2024, $310,000; December 2024, $396,800. Purchases of direct materials: December 2024, $124,000. Other receipts: January-Collection of December 31, 2024, notes receivable $18,600; February-Proceeds from sale of securities $7,440. Other disbursements: February-Payment of $7,440 cash dividend. The company's cash balance on January 1, 2025, is expected to be $74,400. The company wants to maintain a minimum cash balance of $62,000.
Vaughn Company prepares monthly cash budgets. Relevant data from operating budgets for 2025 are as follows. Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses Other data: 1. 2. 3. January February $446,400 $496,000 148,800 4. 111,600 86,800 All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and administrative expenses that include $1,240 of depreciation per month. 97,960 155,000 124,000 93,000 105,400 Credit sales: November 2024, $310,000; December 2024, $396,800. Purchases of direct materials: December 2024, $124,000. Other receipts: January-Collection of December 31, 2024, notes receivable $18,600; February-Proceeds from sale of securities $7,440. Other disbursements: February-Payment of $7,440 cash dividend. The company's cash balance on January 1, 2025, is expected to be $74,400. The company wants to maintain a minimum cash balance of $62,000.
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 4P
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Vaughn Company prepares monthly cash budgets. Relevant data from operating budgets for 2025 are as follows.
Sales
Direct materials purchases
Direct labor
Manufacturing overhead
Selling and administrative expenses
Other data:
1.
2.
3.
January
$446,400
4.
148,800
111,600
86,800
97,960
February
$496,000
All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in
the second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and
the balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and
administrative expenses that include $1,240 of depreciation per month.
155,000
124,000
93,000
105,400
Credit sales: November 2024, $310,000; December 2024, $396,800.
Purchases of direct materials: December 2024, $124,000.
Other receipts: January-Collection of December 31, 2024, notes receivable $18,600;
February-Proceeds from sale of securities $7,440.
Other disbursements: February-Payment of $7,440 cash dividend.
The company's cash balance on January 1, 2025, is expected to be $74,400. The company wants to maintain a minimum cash balance
of $62,000.
Transcribed Image Text:Prepare a cash budget for January and February in columnar form.
VAUGHN COMPANY
Cash Budget
+
$
$
January
$
February
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