Paddu Company\'s budgeted sales and direct materials purchases follow. January w

Question

Paddu Company's budgeted sales and direct materials purchases follow. January was the first month of operations. Budgeted Sales: January $135,000; February $185,000; March $245,000 Budgeted Direct Materials Purchases: January $40,000; February $32,000; March $40,000 Paddu's sales are 30% cash and 70% credit. It collects credit sales 30% in the month of sale, 70% in the month following the sale Paddu's purchases are 30% cash and 70% on account. It pays purchases on account 30% in the month of purchase, and 70% in the month following purchase. Prepare a schedule of expected collections for January, February, and March. (Round answers to O decimal places, e.g. 5,275.) Paddu Company Expected Collections January February March Collections: Cash sales Collections of credit sales: January sales February sales March sales Total collections

Explanation / Answer

Paddu Company Expected Collections January February March Budgeted Sales             1,35,000             1,85,000        2,45,000 Collections: Cash Sales                40,500                55,500            73,500 (135000X30%) (185000X30%) (245000X30%) Credit sales                94,500             1,29,500        1,71,500 Collections of credit sales: January Sales                28,350                66,150                     -   94500X30% 94500X70% February Sales                          -                  38,850            90,650 129500X30% 129500X70% March Sales                          -                            -              51,450 171500X30% Total Collections                68,850             1,60,500        2,15,600

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