LRF Company\'s budgeted sales and direct materials purchases are as follows. LRF
ID: 2469194 • Letter: L
Question
LRF Company's budgeted sales and direct materials purchases are as follows. LRF's sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 40% in the month following sale, and 46% in the second month following sale; 4% are uncollectible. LRF'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. Prepare a schedule of expected collections from customers for March. Prepare a schedule of expected payments for direct materials for March.Explanation / Answer
Prepare a schedule of expected collections from customers for March:
LRF Company
Expected collections from customers
Details
Jan
Feb
Mar
Total sales
$ 195,000
$ 229,400
$ 277,500
Sales- Cash
$ 58,500
$ 68,820
$ 83,250
Sales - Credit
$ 136,500
$ 160,580
$ 194,250
Collection from customers- 10% for the month
$ 13,650
$ 16,058
$ 19,425
Collection from customers- 40% for the month following
$ 54,600
$ 64,232
Collection from customers- 46% for the second month following
$ 73,867
Total collections from customers
$ 72,150
$ 139,478
$ 240,774
Therefore, total collections form customers are $240,774 in the March.
Prepare a schedule of expected payments for direct materials for March:
LRF Company
Expected collections from customers
Details
Jan
Feb
Mar
Total purchases
$ 28,100
$ 32,600
$ 38,700
Purchase- Cash
$ 14,050
$ 16,300
$ 19,350
Purchase- Credit
$ 14,050
$ 16,300
$ 19,350
Purchase- 40% for the month
$ 5,620
$ 6,520
$ 7,740
Purchase- 60% for the following month
$ 8,430
$ 9,780
Total expected payments
$ 19,670
$ 31,250
$ 36,870
Therefore, expected payments for the month of March are $36,870.
LRF Company
Expected collections from customers
Details
Jan
Feb
Mar
Total sales
$ 195,000
$ 229,400
$ 277,500
Sales- Cash
$ 58,500
$ 68,820
$ 83,250
Sales - Credit
$ 136,500
$ 160,580
$ 194,250
Collection from customers- 10% for the month
$ 13,650
$ 16,058
$ 19,425
Collection from customers- 40% for the month following
$ 54,600
$ 64,232
Collection from customers- 46% for the second month following
$ 73,867
Total collections from customers
$ 72,150
$ 139,478
$ 240,774
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