Problem 21-4A January February Warning Don\'t show me this message again for the
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Problem 21-4A
January
February
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Expected Collections from Customers
January
February
Expected Payments for Direct Materials
January
February
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COLTER COMPANY
Cash Budget
For the Two Months Ending February 28, 2014
January
February
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Problem 21-4A
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2014 are:January
February
Sales $359,800 $411,200 Direct materials purchases 113,080 133,640 Direct labor 92,520 102,800 Manufacturing overhead 71,960 77,100 Selling and administrative expenses 81,212 88,408All 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 $1,028 of depreciation per month.
Other data:
1. Credit sales: November 2013, $267,280; December 2013, $328,960. 2. Purchases of direct materials: December 2013, $102,800. 3. Other receipts: January—Collection of December 31, 2013, notes receivable $15,420; February—Proceeds from sale of securities $6,168. 4. Other disbursements: February—Payment of $5,140 cash dividend.
The company’s cash balance on January 1, 2014, is expected to be $61,680. The company wants to maintain a minimum cash balance of $51,400.
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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 $ $Warning
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Prepare a cash budget for January and February in columnar form.COLTER COMPANY
Cash Budget
For the Two Months Ending February 28, 2014
January
February
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
$ $AddLess
:Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
AddLess
:Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
AddLess
:Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
AddLess
:Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
Beginning Cash BalanceBorrowingsCollections from CustomersDirect LaborDirect MaterialsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadNotes ReceivableReceiptsRepaymentsSale of SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal ReceiptsCash Dividend
$ $Warning
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Collection from customers Nov Dec Jan Feb sales 267,280 328,960 359,800 411,200 Collection at 50% 133,640 164,480 179,900 205,600 30% in first month 80,184 98,688 107,940 20% in second month 53,456 65,792 Total cash collections 133,640 244,664 332,044 379,332 Expected payments for raw material Nov Dec Jan Feb Purchases 102,800 113,080 133,640 60% in the month of purchase 61,680 67,848 80,184 Balance in next month 41,120 45,232 Total payment for materials 61,680 108,968 125,416 Total cash budget Nov Dec Jan Feb Collection from customers 133,640 244,664 332,044 379,332 Total payment for materials (61,680) (108,968) (125,416) Direct labor - (92,520) (102,800) Manufacturing overhead - (71,960) (77,100) Selling and admin exp - (80,184) (87,380) Proceed from sale of securities 6,168 payment of dividend (5,140) Total cash inflow / (outflow) 133,640 182,984 (21,588) (12,336)
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