I have Expected Collections and Expected Payments already figured. Including it
ID: 2481256 • Letter: I
Question
I have Expected Collections and Expected Payments already figured. Including it in qestion because numbers are needed for Cash Budget. Please assist with Cash Budget. Thank you!
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows: Januar Februar Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses $367,920 122,640 91,980 71,540 80,738 $408,800 127,750 102,200 76,650 86,870 All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and administrative expenses that include $1,022 of depreciation per month Other data: 1. 2. 3. Credit sales: November 2016, $255,500; December 2016, $327,040 Purchases of direct materials: December 2016, $102,200 Other receipts: January-Collection of December 31, 2016, notes receivable $15,330; February-Proceeds from sale of securities $6,132 4. Other disbursements: February-Payment of $6,132 cash dividend The company's cash balance on January 1, 2017, is expected to be $61,320. The company wants to maintain a minimum cash balance of $51,100Explanation / Answer
Collection from customers: Nov Dec. Jan Feb Sales $ 255,500 $ 327,040 $ 367,920 $ 408,800 Cash collected 50% in same month $ 127,750 $ 163,520 $ 183,960 $ 204,400 Cash collected 30% in following month of sale $ 76,650 $ 98,112 $ 110,376 20% collected in second month following the sale $ 51,100 $ 65,408 Cash collected $ 333,172 $ 380,184 Payment to suppliers: Dec. Jan Feb Purchases made $ 102,200 $ 122,640 $ 127,750 Payment in same month 60% $ 73,584 $ 76,650 Payment in following month 40% $ 40,880 $ 49,056 Cash paid to suppliers $ 114,464 $ 125,706 COLTER COMPANY Cash Budget January February Beginning balance $ 61,320 $ 52,122 Add: Cash collected from customers $ 333,172 $ 380,184 Notes receivable $ 15,330 Proceeds from sale of securities $ 6,132 Less: Payment to suppliers $ (114,464) $ (125,706) Direct labor $ (91,980) $ (102,200) Manufacturing overhead $ (71,540) $ (76,650) Selling and administrative exp $ (79,716) $ (85,848) Payment of cash dividend $ (6,132) Excess (Deficiency) of available cash over cash disbursement $ 52,122 $ 41,902 Financing: Borrowings $ 10,000 Less: Repayment $ - $ - Cash balance at the end of month $ 52,122 $ 51,902 The company borrowed $10,000 in the month of February to maintain the minimum balance of $51,100 at the end of the month.
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