Cotter Company prepares monthly cash budgets. Relevant data from operating budge
ID: 2735249 • Letter: C
Question
Cotter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows: January February Sales $380,160 $422,400 Direct materials purchases 126,720 132,000 Direct labor 95,040 105,600 Manufacturing overhead 73,920 79,200 Selling and administrative expenses 83,424 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: Credit sales: November 2016, $ 264,000; December 2016, $ 337,920. Purchases of direct materials: December 2016, $ 105,600. Other receipts: January-Collection of December 31, 2016, notes receivable $ 15,840; February-Proceeds from sale of securities $ 6,336. 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. Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. Prepare a cash budget for January and February in columnar form. (Do not leave any answer field blank. Enter 0 for amounts.)Explanation / Answer
Expected Collections From Customers
Expected Payment for direct material
COLTER COMPANY
CASH BUDGET
For the two months ending February 28, 2017
*Selling and administrative expenses less $1,056 depreciation. Because depreciation is a non cash expense and hence will not be a part of cash budget
January February November ($264000) $52800 - December ($337920) $101376 $67584 January ($380160) $190080 $114048 February ($422400) - $211200 Total $344256 $392832