Colter Company prepares monthly cash budgets. Relevant data from operating budge
ID: 2481939 • Letter: C
Question
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows: 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 $1,142 of depreciation per month. Other data: Credit sales: November 2016, $285,500; December 2016, $365,440. Purchases of direct materials: December 2016, $114,200. Other receipts: January-Collection of December 31, 2016, notes receivable $17,130; February-Proceeds from sale of securities $6,852. Other disbursements: February-Payment of $6,852 cash dividend. The company's cash balance on January 1, 2017, is expected to be $68,520. The company wants to maintain a minimum cash balance of $57,100.Explanation / Answer
Colter Company
Cash Budget
November
December
January
February
Beginning Cash Balance
$ 68,520
$ 58,242
Sales
$ 285,500
$ 365,440
$ 411,120
$ 456,800
Collection from sales:
50% in the month of sales
$ 205,560
$ 228,400
(411120*50%)
(456800*50%)
30% in the following month
$ 109,632
$ 123,336
(365440*30%)
(411120*30%)
20% in the second following month
57100
$ 73,088
(285500*20%)
(365440*20%)
Total Collection from sales
$ 372,292
$ 424,824
Other Receipts :
Collection of Notes Receivables
$ 17,130
Proceeds from sale of securities
$ 6,852
Total Cash Receipts (A)
$ 389,422
$ 431,676
Cash Disbursements:
Direct Material Purchases
$ 114,200
$ 137,040
$ 142,750
Payment for purchases:
60% in the month of purchase
$ 82,224
$ 85,650
(137040*60%)
(142750*60%)
40% in the following month
$ 45,680
$ 54,816
(114200*40%)
(137040*40%)
Total Payment for purchase of Material (B)
$ 127,904
$ 140,466
Payment for Direct Labor (C)
$ 102,780
$ 114,200
Payment for manufacturing overhead (D)
$ 79,940
$ 85,650
Payment for Selling and administrative expenses (E)
$ 89,076
$ 95,928
(Expense - Depreciation )
(90218-1142)
(97070-1142)
Other Disbusrements (F)
$ 6,852
Total Cash Disbursement G = (B+C+D+E+F)
$ 399,700
$ 443,096
Net cash Available = Beginning Cash + A-G
$ 58,242
$ 46,822
Loan Taken
$ -
$ 10,278
(Minumum balance to be maintained is $57100)
(57100-46822)
Loan Paid
$ -
$ -
Ending cash Balance
$ 58,242
$ 57,100
Colter Company
Cash Budget
November
December
January
February
Beginning Cash Balance
$ 68,520
$ 58,242
Sales
$ 285,500
$ 365,440
$ 411,120
$ 456,800
Collection from sales:
50% in the month of sales
$ 205,560
$ 228,400
(411120*50%)
(456800*50%)
30% in the following month
$ 109,632
$ 123,336
(365440*30%)
(411120*30%)
20% in the second following month
57100
$ 73,088
(285500*20%)
(365440*20%)
Total Collection from sales
$ 372,292
$ 424,824
Other Receipts :
Collection of Notes Receivables
$ 17,130
Proceeds from sale of securities
$ 6,852
Total Cash Receipts (A)
$ 389,422
$ 431,676
Cash Disbursements:
Direct Material Purchases
$ 114,200
$ 137,040
$ 142,750
Payment for purchases:
60% in the month of purchase
$ 82,224
$ 85,650
(137040*60%)
(142750*60%)
40% in the following month
$ 45,680
$ 54,816
(114200*40%)
(137040*40%)
Total Payment for purchase of Material (B)
$ 127,904
$ 140,466
Payment for Direct Labor (C)
$ 102,780
$ 114,200
Payment for manufacturing overhead (D)
$ 79,940
$ 85,650
Payment for Selling and administrative expenses (E)
$ 89,076
$ 95,928
(Expense - Depreciation )
(90218-1142)
(97070-1142)
Other Disbusrements (F)
$ 6,852
Total Cash Disbursement G = (B+C+D+E+F)
$ 399,700
$ 443,096
Net cash Available = Beginning Cash + A-G
$ 58,242
$ 46,822
Loan Taken
$ -
$ 10,278
(Minumum balance to be maintained is $57100)
(57100-46822)
Loan Paid
$ -
$ -
Ending cash Balance
$ 58,242
$ 57,100