Colter Company prepares monthly cash budgets. Relevant data from operating budge
ID: 2524239 • Letter: C
Question
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows: Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses January $380,160 126,720 95,040 73,920 83,424 February $422,400 132,000 105,600 79,200 89,760 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 $1,056 of depreciation per month. Other data: 1. Credit sales: November 2016, $264,000; December 2016, $337,920. 2. Purchases of direct materials: December 2016, $105,600. 3. Other receipts: January-Collection of December 31, 2016, notes receivable $15,840; February-Proceeds from sale of securities $6,336. 4. Other disbursements: February-Payment of $6,336 cash dividend The company's cash balance on January 1, 2017, is expected to be $63,360. The company wants to maintain a minimum cash balance of $52,800. (a) Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. Expected Collections from Customers January February November December January February Total collections & Expected Payments for Direct Materials January February December January February Total paymentsExplanation / Answer
Expected cash collection :
Expected cash payment :
January February November 264000*20% = 52800 December 337920*30% = 101376 337920*20% = 67584 January 380160*50% = 190080 380160*30% = 114048 February 422400*50% = 211200 Total cash collection 344256 392832