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Bonita Company expects to have a cash balance of $ 46,000 on January 1, 2022....

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Accounting

Bonita Company expects to have a cash balance of $ 46,000 on January 1, 2022. Relevant monthly budget data for the first two months of 2022 are as follows:

1. Collections from customers: January $ 98,000; February $ 159,000
2. Payments to suppliers: January $ 60,000; February $ 80,000
3. Direct labour: January $ 32,000; February $ 44,000. Wages are paid in the month they are incurred.
4. Manufacturing overhead: January $ 26,000; February $ 30,000. These costs include depreciation of $ 1,000 per month. All other overhead costs are paid as incurred.
5. Selling and administrative expenses: January $ 15,000; February $ 20,000. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of marketable securities in January are expected to realize $ 9,000 in cash.

Bonita Company has a line of credit at a local bank. It can borrow up to $ 21,000. The company wants to keep a minimum monthly cash balance of $ 21,000. Prepare a cash budget for January and February.

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