Problem 21-4A (Part Level Submission) Colter Company prepares monthly cash budge
ID: 2424558 • Letter: P
Question
Problem 21-4A (Part Level Submission) Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2014 are: January February Sales $390,250 $446,000 Direct materials purchases 122,650 144,950 Direct labor 100,350 111,500 Manufacturing overhead 78,050 83,625 Selling and administrative expenses 88,085 95,890 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 $1,115 of depreciation per month. Other data: 1. Credit sales: November 2013, $289,900; December 2013, $356,800. 2. Purchases of direct materials: December 2013, $111,500. 3. Other receipts: January—Collection of December 31, 2013, notes receivable $16,725; February—Proceeds from sale of securities $6,690. 4. Other disbursements: February—Payment of $5,575 cash dividend. The company’s cash balance on January 1, 2014, is expected to be $66,900. The company wants to maintain a minimum cash balance of $55,750. Collapse question part (a) Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. Expected Collections from Customers January February November $ $ December January February Total collections $ $ Expected Payments for Direct Materials January February December $ $ January February Total payments $ $ Click if you would like to Show Work for this question: Open Show Work
Explanation / Answer
Answer
Answer (1)
Expected collections from customers for January and February.
Colter Company
Expected Collection from Customers for January and February 2014
Figures in $
2013
2014
Particulars
November
December
January
February
Credit Sales
289900
356800
390250
446000
Collection
50% in the month of sale
a
144950
178400
195125
223000
30% in the first month following the sale
b
86970
107040
117075
20% in the second month following the sale
c
57980
71360
Expected Collection from customer (a+b+c)
360145
411435
Answer (2)
Expected payments for direct materials purchases for January and February.
Colter Company
Expected payments for direct material purchases for January and February 2014
Figures in $
2013
2014
Particulars
December
January
February
Direct material purchases
111500
122650
144950
Payment
60% paid in cash in the month of purchase
a
66900
73590
86970
The balance(40%) paid in the month following the purchase
b
44600
49060
Expected payments for direct material purchases (a+b)
118190
136030
Colter Company
Expected Collection from Customers for January and February 2014
Figures in $
2013
2014
Particulars
November
December
January
February
Credit Sales
289900
356800
390250
446000
Collection
50% in the month of sale
a
144950
178400
195125
223000
30% in the first month following the sale
b
86970
107040
117075
20% in the second month following the sale
c
57980
71360
Expected Collection from customer (a+b+c)
360145
411435
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