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February

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(a)

Expected Collections from Customers

January

February

Expected Payments for Direct Materials

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February

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(b)

COLTER COMPANY
Cash Budget
For the Two Months Ending February 28, 2014

January

February

Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2014 are:

January

February

Sales $415,450 $474,800 Direct materials purchases 130,570 154,310 Direct labor 106,830 118,700 Manufacturing overhead 83,090 89,025 Selling and administrative expenses 93,773 102,082
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 $1,187 of depreciation per month.

Other data:
1. Credit sales: November 2013, $308,620; December 2013, $379,840. 2. Purchases of direct materials: December 2013, $118,700. 3. Other receipts: January—Collection of December 31, 2013, notes receivable $17,805;                       February—Proceeds from sale of securities $7,122. 4. Other disbursements: February—Payment of $5,935 cash dividend.
The company’s cash balance on January 1, 2014, is expected to be $71,220. The company wants to maintain a minimum cash balance of $59,350.

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Explanation / Answer

Cash Budget

Jan Feb Beginning bal 71,220 64,098 collection 383,401 438,003 Note recievable    17,805 Securities sale     7,122 Total collection 472,426 509,223 less:disbursement Material (125,822) (144,814) Direct labor (106,830) (118,700) MOH (83,090) (89,025) Selling (92,586) (100,895) Cash dividend (5935) Total disbursement (408,328) (459,369) Excess(deficit) 64,098 49,854 Borrowing 9,496 Cash ending 64,098 59,350

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