Problem 21-4A Colter Company prepares monthly cash budgets. Relevant data from o

Question

Problem 21-4A Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows January _February Sales Direct materials purchases Direct labor $426,240 142,080 105,560 82,880 93,536 $473,600 148,000 118,400 83,800 100,640 Selling and administrative expenses All sales are on account Collections are expected to be 50% in the month of sale, 30% in the st month following the sale and 20% in the second month following the sale Sixty percent 60% of direct materials purchases purchase, and the balance due is paid in the month folowing the purchase. All other items above are paid in the month incurred except for selling and administrative expenses that include $1,184 of depreclation per month. Other data 1. Credit sales: November 2016, $296,000; December 2016, 378,880 2. Purchases of direct materias: December 2016, $118,400 3. Other rece pts: JanuarY-Collection of December 31, 2016, notes receivable $17,760 e paid in cash in the month of February-Proceeds from sale of securities $7,104 4. Other disbursements: February Payment of $7,104 cash dividend The company's cash balance on January 1, 2017, is expected to be $71,040. The company wants to maintain a minimum cash balance of $59,200 Prepare schedules for(1) expected collections from customers and (2) expected payments for direct materials purchases for January and February JanuaryFebruary November January Februany Total collections an Febru January February Total payments s

Explanation / Answer

1.

Expected Collections from Customers

January

February

November

$ 59,200

December

$ 113664

$ 75776

January

$ 213120

$ 127872

February

-

$236800

Total Collections

$ 385984

$440448

2.

Expected Payments for Direct Materials

January

February

December

$ 47,360

-

January

$ 85,248

$ 56832

February

-

$ 88800

Total Payments

$ 1,32,608

$ 1,45,632

3.

                                     Colter Company

                                      Cash Budget

Particulars

January

February

Opening balance

$71040

$ 60384

Collection from Debtors

$385984

$440448

Collection of Notes Receivables

$ 17,760

-

Proceeds of sale of Securities

-

$ 7,104

Total Cash Inflows(i)

$ 474784

$ 507936

Cash Purchases

$ 85248

$ 88800

Payments to Creditors

$ 47360

$ 56832

Direct Labour

$ 106560

$ 118400

Manufacturing Overheads

$ 82880

$ 88,800

Selling & Administration Expenses

$ 92352

$ 99456

Payment of cash Dividend

-

$ 7104

Total cash outflow(ii)

$414400

$459392

Balance(i)-(ii)

$ 60384

$ 48544

Borrowings(To meet the deficit in

Order to maintain a minimum

Balance of $ 59,200.

$ 10656

Expected Collections from Customers

January

February

November

$ 59,200

December

$ 113664

$ 75776

January

$ 213120

$ 127872

February

-

$236800

Total Collections

$ 385984

$440448

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.