Question

Hagen Company's budgeted sales and direct materials purchases are as follows. Budgeted Sales Budgeted D.M. Purchases January $300,000 $60,000 February 330,000 70,000 March 350,000 80,000 Hagen's sales are 40% cash and 60% 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. Hagen'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.

Prepare a schedule of expected collections from customers for March. HAGEN COMPANY Expected Collections from Customers March March Cash Sales $ Collection of March Credit Sales Collection of February Credit Sales Collection of January Credit Sales   Total Collections $

Prepare a schedule of expected payments for direct materials for March. HAGEN COMPANY Expected Payments for Direct Materials March March Cash Purchases $ Payment of March Credit Purchases Payment of February Credit Purchases   Total Payments $

Answer 1

WORKING NOTES: 1
	SCHEDULE OF THE CASH RECEIPT FOR THE MONTH OF JAN , FEB & MAR
	PARTICULARS	JAN	FEB	MAR
	Sales	$         3,00,000	$           3,30,000	$           3,50,000
	Less: Cash Sales 40% (A)	$         1,20,000	$           1,32,000	$           1,40,000
	Credit Sales Balance 60%	$         1,80,000	$           1,98,000	$           2,10,000
	10 % Expected to collect in the same month (B)	$            18,000	$               19,800	$               21,000
	50% in the month following the sale ('C)		$               90,000	$               99,000
	36% in second month following the sales(D)			$               64,800
	Total Cash Collected (A+B+C+D)	$         1,38,000	$           2,41,800	$           3,24,800
WORKING NOTES: 2
	SCHEDULE OF THE CASH PAYMENT FOR THE MONTH OF JAN , FEB & MAR
	PARTICULARS	JAN	FEB	MAR
	Purhcase	$            60,000	$               70,000	$               80,000
	Less: Cash Purchases 50% (A)	$            30,000	$               35,000	$               40,000
	Credit Purchase balance 50%	$            30,000	$               35,000	$               40,000
	40 % Paid in the same month (B)	$            12,000	$               14,000	$               16,000
	60% in the month following month of Purchases ("C)		$               15,000	$               17,500
	Total Cash Paid(A+B+C)	$            42,000	$               64,000	$               73,500
SOLUTION:
	HAGEN COMPANY
	EXPECTED COLLECTION FROM CUSTOMERS
		MARCH
	March Cash Sales	$         1,40,000
	Collection of March Credit Sales	$            21,000
	Collection of February Credit Sales	$            99,000
	Collection of January Credit Sales	$            64,800
	Total Collection	$         3,24,800
SOLUTION:
	HAGEN COMPANY
	EXPECTED PAYMENT FOR DIRECT MATERIALS
		MARCH
	March Cash Purchases	$            40,000
	Payment of March Credit Purchases	$            16,000
	Payment of February Credit Purchases	$            17,500
	Total Payments	$            73,500