Description
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Problem 23-4A |
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Colter Company prepares
monthly cash budgets. Relevant data from operating budgets for 2014 are:
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January |
February |
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Sales |
$349,600 |
$399,900 |
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Direct materials |
110,700 |
130,700 |
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Direct labor |
89,820 |
100,610 |
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Manufacturing overhead |
69,990 |
74,910 |
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Selling and |
79,280 |
85,630 |
All sales are on account. Collections are expected to be 49% in the month
of sale, 30% in the first month following the sale, and 21% 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
$1,400 of depreciation per month.
Other data:
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1. |
Credit sales: November |
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2. |
Purchases of direct |
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3. |
Other receipts: |
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4. |
Other disbursements: |
The company’s cash balance on January 1, 2014, is expected to be $60,300. The
company wants to maintain a minimum cash balance of $48,600.
Prepare schedules for
expected collections from customers and expected payments for direct materials
purchases for January and February.
Prepare a cash budget
for January and February.
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