PROBLEM 23B See schedule for due date. Use working papers provided. Relevant dat

Question

PROBLEM 23B See schedule for due date. Use working papers provided. Relevant data from 2015 operating budgets for Teavana Company are shown below: April May Sales revenue $400,000 $500,000 Direct materials purchases 116,000 136,000 Direct labor 100,000 105,000 Manufacturing overhead 97,000 80,000 Selling and administrative expenses 108,000 90,000 All sales are on account. Collections are expected to be 61% in the month of sale, 34% in the first month following the sale, and 5% in the second month following the sale. Fifty-five percent (55%) of direct material 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. Other data: 1. Credit sales: February 2015, $260,000; March 2015, $330,000. 2. Purchases of direct materials: March 2015, $106,000. 3. Other receipts: April – Collection of notes receivable $20,000; May – Proceeds from sale of stock securities $8,000. 4. Other disbursements: May-payment of a cash dividend of $20,000. The company’s cash balance on April 1, 2015, is expected to be $75,000. The company wants to maintain at least a minimum cash balance of $50,000. Instructions (a) Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases. (b) Prepare a cash budget for April and May in columnar form. (If money is borrowed ignore interest.)

Explanation / Answer

Teavana Company All Amounts in $ (a) Schedule for (1) Expected Collections from Customers April May Collections from Sales in February 13000 March 112200 16500 April 244000 136000 May 305000 369200 457500 (2) Expected Payments for Direct Materials Purchase April May Purchases made in March 47700 April 63800 52200 May 74800 111500 127000 (b) Expected Cash Budget for April and May April May Opening Cash Balance 75000 55700 Borrowings made Collections from Sales 369200 457500 Collection of Notes Receivable 20000 Sale of Stock Securities 8000 472200 513200 Payments for Material Purchases 111500 127000 Direct Labor 100000 105000 Manufacturing Overheads 97000 80000 Selling and Administrative Expenses 108000 90000 Cash Dividend Paid 20000 Closing Cash Balance 55700 91200

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.