n Making, se Gradebook ORION ent Colter Company prepares monthly cash budgets. R

Question

n Making, se Gradebook ORION ent Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2014 are: Sales $417,900 $477,600 155,220 107,460 119,400 89,550 94,326 102,684 131,340 Direct labor 83,580 es are on account. Collections are expected to be 50% in the month of sale, 30% in All sal percent (60%) of direct materials purchases are paid in cash in the month of purchase, and the balan in the month incurred except for selling and administrative expenses that indlude $1,194 of depreciation per month. the first month following the sale, and 20% in the second month following in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other ite Other data: 1. Credit sales: November 2013, $310,440; December 2013, $382,080 2. Purchases of direct materials: December 2013, $119,400. 3. Other receipts: January-Collection of December 31, 2013, note other receipts: January-Collection of December 31, 2013, notes receivable $17,910 February-Proceeds from sale of securities $7,164. 4. Other disbursements: February-Payment of $5,970 cash dividend The company's cash balance on January 1, 2014, is expected to be $71,640. The compan Prepare schedules for (1) expected collect y wants to maintain a minimum cash balance of $59,700. ions from customers and (2) expected payments for direct materials purchases for January and February.

Explanation / Answer

Expected Cash collections from Customers January February Credit Sales for the month 417900 477600 Current month sales -50% 208950 238800 Previous month sales - 30% 114624 125370 Subsequent month - 20% 62088 76416 Total collection 385662 440586 working January - collections Current month sales -50% of 417900 208950 Previous month sales - 30% od Dec sales 114624 Subsequent month - 20% of Nov sales 62088 February collections Current month sales -50% of 477600 238800 Previous month sales - 30% of Jan sales 125370 Subsequent month - 20% of Dec sales 76416 Expected payment FOR Direct Material January February Direct Material Purchase 131340 155220 Current month payment - 60% 78804 93132 Previous month payment- 40% 47760 52536 Total cash payment 126564 145668 Cash Budget January February opening balance 71640 64486 Expected cash collections 385662 440586 Notes Receivable 17910 sale of securities 7164 Total Cash Receipts (A) 475212 512236 Less : Cash Payment for Direct material 126564 145668 Direct labor 107460 119400 Manufacturing overhead 83580 89550 Selling and administrative expenses - Depriciation 93122 101490 Cash Dividend paid 5970 Total Cash Payments (B) 410726 462078 Closing balance ( A-B) 64486 50158

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