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 FeD February $372,240 124,080 93,060 72,380 81,686 $413,600 129,250 103,400 77,550 87,890 Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses 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 $1,034 of depreciation per month Other data 1 Credit sales: November 2016, $258,500; December 2016, $330,880 2. Purchases of direct materials: December 2016, $103,400 3. Other receipts: January-Collection of December 31, 2016, notes receivable $15,510; 4. Other disbursements: February-Payment of $6,204 cash dividend The company's cash balance on January 1, 2017, is expected to be $62,040. The company wants to maintain a minimum cash balance of $51,700 February-Proceeds from sale of securities $6,204

Explanation / Answer

Expected Collections from Customer January February November(20/0) 51700 0 December(30/20) 99264 66176 January(50/30) 186120 124080 February(0/50) 0 206800 Total Collections $        337,084 $        397,056 Expected Payments For Direct materials January February December(40/0) 41360 0 January(60/40) 74448 49632 February(0/60) 0 77550 Total Payments $        115,808 $        127,182 COLTER COMPANY Cash Budget For the Two Months Ending February 28, 2017 January February Beginning Cash Balance $          62,040 $          52,734 Add: Receipts Collections from Customers $        337,084 $        397,056 Sale of Securities 6204 Notes Receivable 15510 Total Receipts $        352,594 $        403,260 Total Available Cash $        414,634 $        455,994 Less: Disbursements Direct Materials $        115,808 $        127,182 Direct Labor 93060 103,400 Manufacturing Overhead 72380 77,550 Selling and Administrative Expenses 80652 86,856 Cash Dividend 0 6204 Total Disbursements $        361,900 $        401,192 Excess (DeFciency) of Available Cash Over Cash Disbursements $          52,734 $          54,802 Financing Add: Borrowings Less: Repayments Ending Cash Balance $          52,734 $          54,802

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