Question

Nieto Company’s budgeted sales and direct materials purchases are as follows.

		Budgeted Sales		Budgeted D.M. Purchases
January		$278,000		$39,600
February		307,100		42,900
March		283,600		42,000

Nieto’s sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Nieto’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.

(a)

Prepare a schedule of expected collections from customers for March.

NIETO COMPANY Expected Collections from Customers
		March
select an item Payment of March credit purchasesMarch cash purchasesJanuary cash salesCollection of March credit salesPayment of February credit purchasesMarch cash salesFebruary cash salesCollection of January credit salesCollection of February credit sales		$enter a dollar amount
select an item Collection of February credit salesMarch cash purchasesCollection of March credit salesCollection of January credit salesFebruary cash salesPayment of March credit purchasesPayment of February credit purchasesJanuary cash salesMarch cash sales		enter a dollar amount
select an item Collection of January credit salesMarch cash salesPayment of February credit purchasesCollection of March credit salesFebruary cash salesCollection of February credit salesJanuary cash salesMarch cash purchasesPayment of March credit purchases		enter a dollar amount
select an item January cash salesMarch cash salesCollection of February credit salesCollection of January credit salesPayment of March credit purchasesMarch cash purchasesFebruary cash salesPayment of February credit purchasesCollection of March credit sales		enter a dollar amount
Total collections		$enter a total amount

(b)

Prepare a schedule of expected payments for direct materials for March.

NIETO COMPANY Expected Payments for Direct Materials
		March
select an item March cash salesCollection of January credit salesCollection of February credit salesFebruary cash salesJanuary cash salesMarch cash purchasesPayment of March credit purchasesCollection of March credit salesPayment of February credit purchases		$enter a dollar amount
select an item February cash salesPayment of February credit purchasesMarch cash salesJanuary cash salesMarch cash purchasesCollection of January credit salesPayment of March credit purchasesCollection of February credit salesCollection of March credit sales		enter a dollar amount
select an item February cash salesMarch cash salesPayment of March credit purchasesJanuary cash salesMarch cash purchasesCollection of January credit salesPayment of February credit purchasesCollection of March credit salesCollection of February credit sales		enter a dollar amount
Total payments		$enter a total amount

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Answer 1

Requirement a

NIETO COMPANY
Expected Collections from Customers
		March
Cash sales march		$         85,080
Collection of March credit sales		$         19,852
Collection of February credit sales		$      107,485
Collection of January credit sales		$         70,056
Total collections		$      282,473

Working

	January	February	March
Sales	$ 278,000.00	$                 307,100.00	$ 283,600.00
Cash sales	$    83,400.00	$                   92,130.00	$    85,080.00
Credit sales	$ 194,600.00	$                 214,970.00	$ 198,520.00

.

Requirement b

NIETO COMPANY
Expected Payments for Direct materials
March Cash Purchases	$    21,000.00
Payment for march credit Purchases	$      8,400.00
Payment for February credit Purchases	$    12,870.00
Total Payments	$    42,270.00

Working

Calculation of Payment for February Purchase
February Purchase	$    42,900.00
Less: Paid in cash in February	$    21,450.00
Purchase on Account	$    21,450.00
On account Purchases Paid in February(21450*40%)	$      8,580.00
On account Purchases Paid in march(21450*60%)	$    12,870.00