Nieto Company’s budgeted sales and direct materials purchases are as follows. Bu

Question

Nieto Company’s budgeted sales and direct materials purchases are as follows.

Budgeted Sales Budgeted D.M. Purchases
January $250,600 $32,200  
February 238,100 45,300  
March 299,600 38,300

Nieto’s sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Nieto’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.

A.) Prepare a schedule of expected collections from customers for March

B.) Prepare a schedule of expected payments for direct materials for March.

Explanation / Answer

a) Schedule of expected collection for march :

b) Expected cash payment for march :

March Cash collection (299600*30%) 89880 Cash collection from credit sale March credit sales (299600*70%*10%) 20972 Feb credit sales (238100*70%*50%) 83335 Jan credit sales (250600*70%*36%) 63151 Total cash collection in march 257338

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