Colter Company prepares monthly cash budgets. Relevant data from operating budge

Question

Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows: NEXT Direct labor Manufacturing overhead Selling and administrative expenses $367,200 $408,000 122,400 127,500 1,800102,000 76,500 86,700 71,400 80,580 All sales are on account. Collections are expected to be 50% in the month of sale, 30% n 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 balanced e's paid in te ont following the purchase. All other items above are paid in the month Incurred except for selling and ad per month. expenses that include $1,020 of depreciation Other data: 1. 2. Credit sales: November 2016, $255,000; December 2016, $326,400. Purchases of direct materials: December 2016, $102,000. 3. Other receipts: January-Collection of December 31, 2016, notes receivable $15,300 4. Other disbursements: February-Payment of $6,120 cash dividend The company's cash balance on January 1, 2017, is expected to be $61,200. The company wants to maintain a minimum cash February-Proceeds from sale of secunities $6,120. (a) y & Sons. Inc. All Rights Reserved. A Division of

Explanation / Answer

Please note: The expected collection from customers only includes collections on account sales. It does not include the notes receivable collected as the same is not specified in the question whether to include or is a separate line item in the cash budget.

Workings:

Expected Collection from Customers January February November 51000 December 97920 65280 January 183600 110160 February 204000 Total collections $ 332520 379440 Expected Payments for Direct Materials January February December 40800 January 73440 48960 February 76500 Total payments $ 114240 125460

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