Reference no: EM132779512

The January 1, 2019 cash balance is expected to be $38,000.

The company wishes to maintain a balance of at least $15,000.

Sales are collected 60% in the quarter sold and 40% are collected in the following quarter.

A/R of $60,000 at December 31, 2018 are expected to be collected in full in the first quarter of 2019.

Sales: Q1= $180,000 Q2= $210,000 Q3= $240,000 Q4= $170,000

Short-term investments are expected to be sold for $2,000 cash in the first quarter.

Direct materials are paid 50% in the quarter purchased and 50% paid for in the following quarter.

A/P of $10,600 at December 31, 2018 are expected to be paid in full in the first quarter of 2019

Direct materials purchase: Q1= $25,200 Q2= $29,200 Q3= $33,200 Q4= $37,200

Direct labour is paid in quarter incurred:

Q1= $62,000 Q2= $72,000 Q3= $82,000 Q4= $92,000

Manufacturing overhead except depreciation:

Q1= $53,300 Q2= $56,300 Q3= $59,300 Q4= $62,300

and selling and administrative expenses are paid in the quarter incurred:

Q1= $41,000 Q2= $43,000 Q3= $45,000 Q4= $47,000

Management plans to purchase a truck in the second quarter for $10,000

The company makes equal quarterly payments of the estimated annual income taxes ($12,000)

Loans are repaid in the earliest quarter in which there is sufficient cash (that is when the cash on hand exceeds the $15,000 minimum required balance). Since there is an excess of available cash, the borrowing plus $100 interest is repaid in the third quarter.

Problem 1: Based on all these assumptions, how can prepare cash budget by quarters for 2019.

Problem 2: In preparing the cash budget, how to prepare schedules for collections from customers and cash payments for direct materials.