Reference no: EM132565527

Below is the budgeted data for Geno Corporation for January and February of 2017:

                                             January                       February

Sales                                 $403,200                   $448,000

Direct materials purchases    134,400                   140,000

Direct labor                        100,800                    112,000

Manufacturing overhead            78,400                    84,000

Selling and administrative expenses 88,480                  95,200

The sales are all made 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. The company wants to maintain a cash balance of $56,000.

Other data: 1.

Credit sales: November 2016, $280,000; December 2016, $358,400.

2. Purchases of direct materials: December 2016, $112,000.

3. Other receipts: January-Collection of December 31, 2016, notes receivable $16,800;

February-Proceeds from sale of investments $6,720.

4. Other disbursements: February-Payment of $6,720 cash dividend.

Required:

Question a) Make a schedule of expected payments for direct materials purchases in January and February of 2017

Question b) If the company is projecting a cash balance of $40,000 at the end of January, how much would it be required to borrow. List 3 ways that the company could finance this amount