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Danner Cash Budget

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Danner Company expects to have a cash balance of $45,000 on January 1, 2014.

Relevant monthly budget data for the first 2 months of 2014 are as follows.
Collections from customers: January $85,000, February $150,000.
Payments for direct materials: January $50,000, February $75,000.
Direct labor: January $30,000, February $45,000. Wages are paid in the month they
are incurred.

Manufacturing overhead: January $21,000, February $25,000. These costs include
depreciation of $1,500 per month. All other overhead costs are paid as incurred.
Selling and administrative expenses: January $15,000, February $20,000. These costs
are exclusive of depreciation. They are paid as incurred.

Sales of marketable securities in January are expected to realize $12,000 in cash. Danner
Company has a line of credit at a local bank that enables it to borrow up to $25,000. The
company wants to maintain a minimum monthly cash balance of $20,000.

Prepare a cash budget for January and February.

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