Ivanhoe Company expects to have a cash balance of $51,750 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows. Collections from customers: January $97,750, February $172,500. Payments for direct materials: January $57,500, February $86,250. Direct labor: January $34,500, February $51,750. Wages are paid in the month they are incurred. Manufacturing overhead: January $24,150, February $28,750. These costs include depreciation of $1,725 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $17,250, February $23,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $13,800 in cash. Ivanhoe Company has a line of credit at a local bank that enables it to borrow up to $28,750. The company wants to maintain a minimum monthly cash balance of $23,000. Prepare a cash budget for January and February.

Ivanhoe Company expects to have a cash balance of $51,750 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows. Collections from customers: January $97,750, February $172,500. Payments for direct materials: January $57,500, February $86,250. Direct labor: January $34,500, February $51,750. Wages are paid in the month they are incurred. Manufacturing overhead: January $24,150, February $28,750. These costs include depreciation of $1,725 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $17,250, February $23,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $13,800 in cash. Ivanhoe Company has a line of credit at a local bank that enables it to borrow up to $28,750. The company wants to maintain a minimum monthly cash balance of $23,000. Prepare a cash budget for January and February.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 5PB: Cash budget The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for...

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