Problem 21-4A Colter Company prepares monthly cash budgets. Relevant data from o

Question

Problem 21-4A Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2014 are: January February Sales Direct materials purchase:s Direct labor Manufacturing overhead Selling and administrative expenses $418,250 131,450 107,550 83,650 94,405 $478,000 155,350 119,500 89,625 102,770 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 $1,195 of depreciation per month. Other data: 1. 2. 3. Credit sales: November 2013, $310,700; December 2013, $382,400. Purchases of direct materials: December 2013, $119,500. Other receipts: January-Collection of December 31, 2013, notes receivable $17,925; February-Proceeds from sale of securities $7,170. 4. Other disbursements: February-Payment of $5,975 cash dividend. The company's cash balance on January 1, 2014, is expected to be $71,700. The company wants to maintain a minimum cash balance of $59,750

Explanation / Answer

1 Expected Collection from Customers: January   February   November $     62,140.00 (310700*20%) December $   114,720.00 $     76,480.00 (382400*30%) (382400*20%) January $   209,125.00 $   125,475.00 (418250*50%) (418250*30%) February $   239,000.00 (478000*50%) Total Collection $   385,985.00 $   440,955.00 2 Expected Payment for Direct Metarial: January   February   December $     47,800.00 (119500*40%) January $     78,870.00 $     52,580.00 (131450*60%) (131450*40%) February $     93,150.00 (155250*60%) Total Payments $   126,670.00 $   145,730.00 3 COLTER COMPANY Cash Budget For the two months ending February 28, 2014 January   February   Beginning Cash Balance $     71,700.00 $     64,530.00 Add: Expected Cash Receipts Expected Collection from Customers $   385,985.00 $   440,955.00 Collection of Dec. 31, 2013, Notes Receivables $     17,925.00 Proceeds from sale of security $        7,170.00 Total Expected Cash Receipts $   403,910.00 $   448,125.00 Less: Expected Payments: Direct Metarial $   126,670.00 $   145,730.00 Direct Labor $   107,550.00 $   119,500.00 Manufacturing Overhead $     83,650.00 $     89,625.00 Selling and Administrative Expenses $     93,210.00 $   101,575.00 (94405-1195) (102770-1195) Cash Dividend $        5,975.00 Total Expected Payments $   411,080.00 $   462,405.00 Net Cash Available $     64,530.00 $     50,250.00 Add: Loan taken $                     -   $        9,500.00 (59750-50250) Less: Loan Repaid $                     -   $                     -   Ending Cash Balance $     64,530.00 $     59,750.00

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