Problem 21-4A Colter Company prepares monthly cash budgets. Relevant data from o

Question

Problem 21-4A

Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows:

January

February

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 $1,188 of depreciation per month.

Other data:

The company’s cash balance on January 1, 2017, is expected to be $71,280. The company wants to maintain a minimum cash balance of $59,400.

January

February

Sales $427,680 $475,200 Direct materials purchases 142,560 148,500 Direct labor 106,920 118,800 Manufacturing overhead 83,160 89,100 Selling and administrative expenses 93,852 100,980 Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. Expected Collections from Customers January February November December January February Total collections Expected Payments for Direct Materials January February December January February Total payments

Explanation / Answer

Expected Collections from Customers Jan Feb November (297,000*20%) 59400 December (380,160*30%;20%) 114048 76032 January (427,680*50%;30%) 213840 128304 February (475,200*50%) 237600 Total collections 387288 441936 expected payment for Direct materials Jan Feb December (118,800*40%) 47520 January (142,560*60%;40%) 85536 57024 February (148,500*60%) 89100 total payments 133056 146124 Cash budget Jan Feb opening cash balance 71,280 60,588 Add:Receipts cash collection 387288 441936 collection of note receivable 17,820 0 sale of securities 0 7,128 total receipts 405108 449064 total cash available 476,388 509652 less:Cash disbursement cash paid for direct materials 133056 146124 cash paid for direct labor 106,920 118,800 cash paid for manufacturing overhead 83,160 89,100 Selling and administrative expense 92664 99792 Cash dividend 7,128 total cash disbursement 415800 460944 Excess(Deficiency) 60,588 48708 financing Add:borrowings 0 10692 less:Repayments 0 Cash balance 60,588 59400

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.