Relevant data from 2017 operating budgets for Gleason Works Company are shown be
ID: 2529267 • Letter: R
Question
Relevant data from 2017 operating budgets for Gleason Works Company are shown below Mav S600,000 170,000 150,000 95,000 80,000 April Sales revenue Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses S450,000 100,000 140,000 115,000 80,000 All sales are on account. Collections are expected to be 40% in the month of sale, 50% in the first month following the sale, and 10% in the second month following the sale. Forty- five percent (45%) of direct material 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. Other data sales: February 2017, S 380,000; March 7 S400,000 1. Credit 2. Purchases of direct materials: March 2017, S150,000 3. Other receipts: April - Collection of notes receivable S10,000; May - Proceeds from sale of stock securities S5,000. 4. Other disbursements: May - payment of S45,000 for truck, The company's cash balance on April 1, 2017, is expected to be $75.000. The company wants to maintain a minimum cash balance of S50,000 Instructions (a) Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases (b) Prepare a cash budget for April and May in columnar form. (If money is borrowed ignore interest.)Explanation / Answer
EXPECTED CASH COLLECTIONS APRIL MAY TOTAL Feb month sales 38,000 38000 March Month Sales 200,000 40,000 240000 April Month Sales 180,000 225,000 405000 May Month Sales 240,000 240,000 Total Cash Collections 418,000 505,000 923,000 EXPECTED CASH PAYMENTS APRIL MAY TOTAL March Month Purchases 82,500 82500 April month purchases 45000 55000 100,000 May month purchases 76500 76500 Total Cash disbursement 127,500 131,500 259,000 CASH BUDGET APRIL MAY TOTAL Beginning balance of cash 75,000 50,000 75000 Cash Collections 418,000 505,000 923,000 Collection of Notes receivable 10,000 10,000 Sale of securities 5,000 5,000 Total Cash available 503,000 560,000 1,013,000 Cash Disbursement: Purchase of material 127,500 131,500 259,000 Labour paid 140000 150000 290000 manufacturing OH 115000 95000 210000 Selling and admin expense 80000 80000 160000 Payment of truck 45000 45000 Total Cash disbursement 462,500 501,500 964,000 Surplus /(shortage) 40,500 58,500 49,000 Broowing/(Repayment) 9,500 -8500 1000 Ending balance 50,000 50,000 50,000