Colter Company prepares monthly cash budgets. Relevant data from operating budge
ID: 2461018 • Letter: C
Question
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2014 are:
Sales; January: 374,150 February: 427,600
Direct Materials Purchases: January: 117,590 February: 138,970
Direct Labor: January: 96,210 February: 106,900
Manufacturing Overhead: January: 74,830 February: 80,175
Selling and Administrative Expenses: January: 84,451 February: 91,934
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 $1,069 of depreciation per month.
The company’s cash balance on January 1, 2014, is expected to be $64,140. The company wants to maintain a minimum cash balance of $53,450.
Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February.
Explanation / Answer
Expected Collections from Customers January February November ($277940) 20% in Jan 55588 December ($342080) 30% in Jan and 20% in Feb 102624 68416 January ($374150) 50% I jan & 30 in Feb 187075 112245 February ($427600) 50% in Feb 213800 Total collections 345287 394461 Expected Payments for Direct Materials January February December ($106900) 40% in Jan 42760 January ($117590) 60% in Jan and 40% in Feb 70554 47036 February ($138970) 60% in Feb 83382 113314 130418