Question

Question 3 Sun and Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are as follows. January February Sales $420,400 $476,000 Direct materials purchases 142.800 148,750 Direct labor 107,100 119,000 Manufacturing overhead 83,300 89,250 Selling and administrative expenses 94,010 101,150 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 materias 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 $1,190 of depreciation per month Other data 1. Credit sales: November 2019, 5297,500: December 2019, $350,000 2. Purchases of direct materials: December 2019, $119,000. 3. Other receipts: January-Collection of December 31, 2019, notes receivable $17,850, February--Proceeds from sale of securities $7,140 4. Other disbursements: February - Payment of $7,140 cash dividend The company's cash balance on January 1, 2020, is expected to be $71,400. The company wants to maintain a minimum cash balance of $59,500. Your answer is partially correct. Try again Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February Expected Collections from Customer

Answer 1

Juss 0 Expected Collections from customers 1 January February November $59500 80 December $ 114,240 $76,160 January $814,900 $108,580 february $0 $238,000 I Total Collections 1438,940 | $442,680) @ Expected payments for direct materials, January $47,600 December February | 80 $57,180 $85,680 January February I Total Payments $0 189,850 $138,280 $146,370

SUNLAND COMPANY Cash Budget for the two months anding February 26, 2020 | January February I Beginning Cash Balance $71,400 466690 TAddr Receipts Collection from Customers +387,940 7443 680 Notes Meceivable +17,850 40 Sale of secunities 80 47,140 Total Receipts $405,790 4449,820 Total Available Cash 9477,190 $510,510 Less: Disbursements Girect materials $133,280 $146,370 direct labor $107,100 | $119.000 manufacturing overhead $83,300 $89,450 selling and administrative overt expenses ३ १२४३० $99,960 cash dividend $7140 Total disbursements $416,500 $461,720 Ese cessageficiency) of Available Cash over lash disbursement $60,690 $48,790 financing Add Borrowings po $10,710 Lassis Repayment Ending Cash Balance $60,690 | $59,500 80
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