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

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. (Round answers to 0 decimal places, e.g. 2,500.)

NIETO COMPANY
Expected Collections from Customers

March

Budgeted Sales

Budgeted D.M. Purchases

January $ 200,000 $ 30,000 February 220,000 36,000 March 250,000 38,000 Exercise 23-17 Your answer is partially comect. Try again. Nirto Company's budgeted sales and dirnct materials purchases are as follows Hudgeted D.H. Budsste soles50 00 anuary Februany March 200,000 220,000 250,000 36,000 38,000 's sales are 30% ces and 70% crediL Credit selesale collected 10% in ie 0 ch sale. 50% in the on lio ino sale end 36% n the se o month loll nw sale; 4% ere uncollec ble Nietos purchases ere 5 % ces and 50% on ecco n. Purchases on accont gre paid 40% morth of purchase, dnd 60% in ure mont' lollowing purchdse. Preuar?, schedule e/expected collections lrorn cuvtorners t Morch. (Round:enswers to 0 decinaalplaces, e.g. 2,500.) NICTO COMPANY Cxpetted Cullet Irom Customes Prepare·schedule ol expected payments fue direct rritelials lur March. (Round aswers lo 0 decimafplaces, e 2,500.) O COMPANY Expected Payments fur Direct Materials Total payments

Explanation / Answer

a)Calculation of cash collections for march: Particulars Amount March cash sales(250000*0.30) 75000 March credit sales(250000*0.7*0.1) 17500 February sales (220000*0.70*0.50) 77000 January sales (200000*0.70*0.36) 50400 Total cash inflow 219900 Budgeted cash collections for march is $219900 b) Calculation of cash payments: Particulars Amount March purchase(38000*0.50) 19000 March credit purchase (38000*0.50*0.40) 7600 February Credit purchase (36000*0.50*0.60) 10800 Total cash payments 37400 So total cash payments is $37400

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