Waterway Company expects to have a cash balance of $45,900 on January 1, 2027. Relevant monthly budget data for the first 2 months of 2027 are as follows.
Collections from customers: January $86,700, February $153,000.
Payments for direct materials: January $51,000, February $76,500.
Direct labor: January $30,600, February $45,900. Wages are paid in the month they are incurred.
Manufacturing overhead: January $21,420, February $25,500. These costs include depreciation of $1,530 per month. All other overhead costs are paid as incurred.
Selling and administrative expenses: January $15,300, February $20,400. These costs are exclusive of depreciation. They are paid as incurred.
Sales of marketable securities in January are expected to realize $12,240 in cash. Waterway Company has a line of credit at a local bank that enables it to borrow up to $25,500. The company wants to maintain a minimum monthly cash balance of $20,400.
Prepare a cash budget for January and February of 2027.
WATERWAY COMPANY
Cash Budget
January
February
