Question

Problem 21-4A (Part Level Submission) Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows: Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses January $403,200 134,400 100,000 78,400 88.480 February $448,000 140,000 112,000 84,000 95,200 All 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 $1,120 of depreciation per month. Other data: 1. Credit sales: November 2016, $280,000; December 2016, $358,400. 2. Purchases of direct materials: December 2016, $112.000. 3. Other receipts: January-Collection of December 31, 2016, notes receivable $16,800; February-Proceeds from sale of securities $6,720. 4. Other disbursements: February-Payment of $6,720 cash dividend. The company's cash balance on January 1, 2017, is expected to be $67,200. The company wants to maintain a minimum cash balance of $56,000. (a) 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 December January February Total payments Click if you would like to Show Work for this question: Open Show Work

Answer 1

Expected collections from customers
		January	February
November		56000
December		107520	71680
January		201600	120960
February			224000
Total collections		365120	416640
Working
		January			February
November		280000*20% = 56000
December		358400*30% = 107520			358400*20%=71680
January		403200*50% = 201600			403200*30%=120960
February					448000*50%= 224000
2)
Expected payment for direct materials
		January	February
December		44800
January		80640	53760
February			84000
Total payments		125440	137760
Working
		January			February
December		112000*40%= 44800
January		134400*60%= 80640			134400*40%=53760
February					140000*60%=84000

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