Problem 23-4A (Part Level Submission) Colter Company prepares monthly cash budge

Question

Problem 23-4A (Part Level Submission)

Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows:

Problem 23-4A (Part Level Submission) Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows: January February Sales Direct materials purchases Direct labor $367,920 408,800 127,750 102,200 76,650 86,870 122,640 91,980 71,540 80,738 Selling and administrative expenses les are on account Collections are expected to be 50% in he month of Sale, 30% în the ri st month following the sale, and 20 in the second month tollo ng the sale. Sixty percent 60% of direct materials purchases are paid in 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 sellng and administrative expenses that include s 1,022 of depreciation per month. Other data: 1. Credit sales: November 2016, $ 255,500 December 2016, S 327,040 2. Purchases of direct materials: December 2016, $ 102,200 3. Other receipts: January-Collection of December 31, 2016, notes recervable S 15,330 February-Proceeds from sale of securities 6,132 4. Other disbursements: February-Payment of S 6,132 cash dividend. The company's cash balance on January 1, 2017, is expected to be s 61,320 . The company wants to maintain a minimum cash balance of ? (a) 51,100 Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. Expected Collections from austomers Janu 51100 s anuary February Total collections

Explanation / Answer

ans b Cash Budget For the Two Months Ending February 28, 2011 January February Beginning cash balance A $61,320 $52,122 Add: Receipts Collections from customers 333172 380184 Notes receivable 15330 Sale of securities 6132 Total receipts R 348502 386316 Total available cash C=A+R $409,822 $438,438 Less: Disbursements Direct materials 114464 125706 Direct labor 91980 102200 Manufacturing overhead 71540 76650 Selling and administrative expenses 79716 85848 (80738-1022) (86870-1022) Cash Dividend 6132 Total disbursements   D 357700 396536 Excess (deficiency) of available cash                 ???5,000 ??over cash disbursements C-D $52,122 $41,902 Financing Borrowings 0 $9,198 (51100-9198) Repayments 0 0 Ending cash balance $52,122 $51,100

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