Blue Corporation is projecting a cash balance of $36,450 in its December 31, 2016, balance sheet. Blue's schedule of expected collections from customers for the first quarter of 2017 shows total collections of $224,775. The schedule of expected payments for direct materials for the first quarter of 2017 shows total payments of $52,245. Other information gathered for the first quarter of 2017 is sale of equipment $3,645; direct labor $85,050, manufacturing overhead $42,525, selling and administrative expenses $54,675; and purchase of securities $17,010. Blue wants to maintain a balance of at least $30,375 cash at the end of each quarter.

Prepare a cash budget for the first quarter.

Answer and Explanation:

The Preparation of cash budget for the first quarter is following below:-

Cash Budget

Particulars Amount

Cash balance Beginning $36,450

Add: Receipts

Total Collection $224,775

Sale of equipment $3,645

Total receipts $228,420

Total cash available $265,870

Less: Disbursements

Direct material $52,245

Direct labor $85,050

Manufacturing overhead $42,525

Selling and

administrative overhead $54,675

Purchase of securities $17,010

Total Disbursements $251,535

Available excess available

cash over disbursements $14,335

Financing

Add: Purchase of securities $17,010

Less: Repayments -

Cash balance at ending $31,345

So, to reach at ending balance we simply added the purchase of securities and ending cash balance.