Colter Company prepares monthly cash budgets. Relevant data from operating budge
ID: 2358421 • Letter: C
Question
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2014 are: January February Sales $360,850 $412,400 Direct materials purchases 113,410 134,030 Direct labor 92,790 103,100 Manufacturing overhead 72,170 77,325 Selling and administrative expenses 81,449 88,666 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 $1,031 of depreciation per month. Other data: 1. Credit sales: November 2013, $268,060; December 2013, $329,920. 2. Purchases of direct materials: December 2013, $103,100. 3. Other receipts: JanuaryExplanation / Answer
collection in jan = .5*360850 + .3*329920 + .2*268060 = 333013 in feb = .2*329920+ .3*360850+ .5 *412400 = 380439 Disbursement of purchase DM in jan = 103100*.4 + 113410*.6 = 109286 Dm in feb = .4*113410 + .6*134030 = 125782 others in jan = 246459 others in feb = 269091 JANUARY FEBRUARY CASH............................... 61860 54593 Minimum required.................51550 51550 for use..............................10310 3043 collection..........................333013 380439 Expense DM..................................(109286) (125782) others..............................(246459) (269091) Notes receivable.................15465 0 Dividents paid........................0 (5155) net remains.......................3043 (16486) To next month ...................54593 35004