Question

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

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.

prepare a schedule of expected collections from customers for March. (Round answers to 0 decimal places, e.g. 2,500.)

Prepare a schedule of expected payments for direct materials for March. (Round answers to 0 decimal places, e.g. 2,500.)

CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 21-17 Nieto Company's budgeted sales and direct materials purchases are as follows. Budgeted Sales Budgeted D.M. Purchases January February $237,200 227,300 284,800 $36,500 43,100 42,900 March 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)

Answer 1

NIETO COMPANY
Expected Collections from Customers
	March
March cash sales	85440
Collection of March credit sales	19936
Collection of February credit sales	79555
Collection of January credit sales	59774
Total collections	244705
NIETO COMPANY
Expected Payments for Direct Materials
	March
March cash purchases	21450
Payment of March credit purchases	8580
Payment of February credit purchases	12930
Total Payments	42960

Above figures have been calculated in the following manner:

NIETO COMPANY
Expected Collections from Customers
	March
March cash sales	=284800*0.3
Collection of March credit sales	=284800*0.7*0.1
Collection of February credit sales	=227300*0.7*0.5
Collection of January credit sales	=237200*0.7*0.36
Total collections	244705
NIETO COMPANY
Expected Payments for Direct Materials
	March
March cash purchases	=42900*0.5
Payment of March credit purchases	=42900*0.5*0.4
Payment of February credit purchases	=43100*0.5*0.6
Total Payments	42960