Weygandt, Accounting Principles, 12e,
Chapter Twenty Three
Solutions to Challenge Exercises
Solution
CE23-1
(a)
Martin Company
Cash Budget
For the months ending February 2017
January
Beginning cash balance
$ 135,000
Add: Receipts
Collections from customers
246,500
Sale of securities
36,000
(continued on the next page)
CE23-1
Total Receipts
282,500
435,000
Total Available Cash
417,500
504,500
Less: Disbursements
Direct Materials
155,000
240,000
Direct Labor
90,000
135,000
Manufacturing overhead
58,000
70,000
expenses
45,000
60,000
cash
over cash disbursements
69,500
(500)
Financing
Add: Borrowings
–
60,500
interest
–
–
Ending Cash Balance
$ 69,500
$ 60,000
(b) (1)
Martin Company
Cash Budget
For the months ending March 2014
January February March
Beginning cash balance $135,000 $ 69,500 $ 60,000
Add: Receipts
(2) $14,500. Martin Company is only approved to borrow up to $75,000 with its credit line. The
company has an outstanding balance of $60,500 on the credit line which means that only
(3) The company will only have to borrow $8,100 if the marketable securities are sold. Selling the
$50,000 securities provides the company with an ending cash balance before borrowing of
(4) Martin Company is running very low on cash during March. The bright spot is that they did end
up with a positive cash balance, however, the company needed to cash out securities and borrow
expenses or find a new source of funds from which to borrow.
Solution
CE23-2
(a)
Moorcroft Company
Schedule of Expected Collections from Customers
Sales April May June
April $300,000 $156,000 90,000 46,800
(b) Moorcroft Company
Schedule of Expected Payment for Direct Materials
Purchases April May June
April $ 45,000 $22,500 9,000 13,500
(c) Moorcroft Company
Schedule of Expected Collections from Customers
Sales April May June
April $300,000 $174,000 90,000 32,400
May 320,000 185,600 96,000
(d)
Moorcroft Company
Schedule of Expected Payment for Direct Materials
Purchases April May June
April $ 45,000 $18,000 10,800 16,200