Exercise 21-17 Nieto Company’s budgeted sales and direct materials purchases are

Question

Exercise 21-17

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

(b)

Prepare a schedule of expected payments for direct materials for March. (Round answers to 0 decimal places, e.g. 2,500.)

NIETO COMPANY
Expected Payments for Direct Materials

March

Open Show Work

Budgeted Sales

Budgeted D.M. Purchases

January $273,800 $37,700 February 233,300 40,600 March 296,500 52,000

Explanation / Answer

NIETO COMPANY Expected collections from Customers March cash sales ($296,500*30%) $    88,950 Collection of January credit sales ($273,800*70%*36%) $    68,998 Collection of January credit sales ($233,300*70%*50%) $    81,655 Collection of January credit sales ($296,500*70%*10%) $    20,755 Total cash collections $ 260,358 NIETO COMPANY Expected payment for direct materials March cash purchases ($52,000*50%) $    26,000 Payment of february credit purchases ($40,600*50%*40%) $      8,120 Payment of March credit purchases ($52,000*50%*60%) $    15,600 Total payments $    49,720

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

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