Question

Problem 23-4A
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows:

      
January
      
February
Sales       $375,840       $417,600
Direct materials purchases       125,280       130,500
Direct labor       93,960       104,400
Manufacturing overhead       73,080       78,300
Selling and administrative expenses       82,476       88,740

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 $1,044 of depreciation per month.

Other data:

1.       Credit sales: November 2016, $261,000; December 2016, $334,080.
2.       Purchases of direct materials: December 2016, $104,400.
3.       Other receipts: January—Collection of December 31, 2016, notes receivable $15,660;
                              February—Proceeds from sale of securities $6,264.
4.       Other disbursements: February—Payment of $6,264 cash dividend.

The company’s cash balance on January 1, 2017, is expected to be $62,640. The company wants to maintain a minimum cash balance of $52,200.
  
  
Correct answer.   Your answer is correct.
   
Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February.

Expected Collections from Customers
      
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February
November      
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February      
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    Total collections       $
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Expected Payments for Direct Materials
      
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February      
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    Total payments       $
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Show Solution
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Link to Text
  
  
Partially correct answer.   Your answer is partially correct. Try again.
   
Prepare a cash budget for January and February in columnar form. (Do not leave any answer field blank. Enter 0 for amounts.)

COLTER COMPANY
Cash Budget
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January
      
February
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Answer 1