Question
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2013 are: 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 $1,300 of depreciation per month. Other data: Credit sales: November 2012, $261,000; December 2012, $321,100. Purchases of direct materials: December 2012, $109,900. Other receipts: January-Collection of December 31, 2012, notes receivable $19,300; February-Proceeds from sale of securities $8,680. Other disbursements: February-Withdrawal of $6,350 cash for personal use of owner, Dewey Yaeger. The company's cash balance on January 1, 2013, is expected to be $74,900. The company wants to maintain a minimum cash balance of $52,680. Complete the schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases. (If answer is zero, please enter 0, do not leave any fields blank.) Expected Collections from Customers Expected Payments for Direct Materials Complete the cash budget for January and February in columnar form. (List multiple entries from largest to smallest amounts, e.g. 10, 5, 1 for the January amounts.) COLTER COMPANY Cash Budget For the Two Months Ending February 28, 2013
Explanation / Answer
Expected Collection from Customers January February November $ 52,200 $ - December $ 96,330 $ 64,220 January $ 175,800 $ 105,480 February $ - $ 204,550 Total Collection $ 324,330 $ 374,250 Expected Payment for Direct Material January February December $ 43,960 $ - January $ 67,980 $ 45,320 February $ - $ 79,440 Total Payments $ 111,940 $ 124,760 Cash Flow Budget January February Beginning Cash Balance 74,900 $57,190 Add: Reciepts Collection from Customer 324,330 374,250 Notes Recievable 19,300 0 Sales of Securities 0 8,680 Total Receipt $343,630 $382,930 Total Available Cash Balance $418,530 $440,120 Less: Disbursement: Direct Material 111,940 124,760 Direct Labor 93,100 105,100 Selling & Administrative Expenses 82,000 92,700 Manufactring Overhead 74,300 78,800 Withdrawl by Owner 0 6,350 Total Disbursement $361,340 $407,710 Excess (Deficiency) of available cash over total disbursement $57,190 $32,410 Financing Borrowing 0 20,270 Repayment 0 0 Ending Cash Balance $57,190 $52,680