GBC Ltd. prepares a monthly cash budget. Here is income statement data for the next two months,
Question:
GBC Ltd. prepares a monthly cash budget. Here is income statement data for the next two months, Dec 2021 and Jan 2022:
December, 2021 January, 2022
Sales $380,000 $400,000
Direct Materials Purchases 120,000 110,000
Direct Labour 85,000 105,000
Manufacturing Costs* 62,000 77,000
Selling and Admin Exp. 75,000 80,000
*Includes $5,000 Depreciation Expense in EACH month.
All sales are on credit. Collections of sales are estimated to be 60% in the month of sale, 30% in the month following the sale, and the leftover balance in the second month following the sale. Direct material purchases are paid as follows: 30% in the month of sale, and the balance in the month after the sale. All other costs requiring payment are paid in the month of sale.
Sales in October, 2021: $200,000; for November, 2021: $280,000.
Direct materials purchases in November, 2021: $90,000.
Other incoming cash: December 2021, interest receivable, $3,000; January, 2022, proceeds from sale of securities, $5,000.
Other outgoing cash: February 2022, payment of cash for land, $20,000.
Cash balance is expected to be $50,000 as of December 1, 2021. The company’s policy is to always start each month with at least $30,000 in cash.
REQUIRED: prepare a cash budget for GBC, for December 2021 and January 2022. Use the schedule below.
GBC Cash Budget: Dec 2021 and Jan 2022
Dec 2021 Jan 2022
Opening balance $ 50,000 ________
Cash from Oct/21 sales ________ ________
Cash from Nov/21 sales ________ ________
Cash from Dec/21 sales ________ ________
Cash from Jan/22 Sales ________ ________
Materials purchases from Nov/21 ________ ________
Materials purchases from Dec/21 ________ ________
Materials purchases from Jan/22 ________ ________
Materials purchases from Feb/22 ________ ________
Direct Labour ________ ________
Manufacturing Costs ________ ________
Selling and admin costs ________ _______
Other Inflows ________ ________
Other outflows ________ ________
Financing (if needed) ________ ________
Closing Balance ________ ________
