Problem 23-4A Colter Company_Cash Budget

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Description

Problem 23-4A

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Colter Company prepares
monthly cash budgets. Relevant data from operating budgets for 2014 are:

January

February

Sales

$349,600

$399,900

Direct materials
purchases

110,700

130,700

Direct labor

89,820

100,610

Manufacturing overhead

69,990

74,910

Selling and
administrative expenses

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:

1.

Credit sales: November
2013, $250,600; December 2013, $318,900.

2.

Purchases of direct
materials: December 2013, $100,900.

3.

Other receipts:
January—Collection of December 31, 2013, notes receivable $15,260;
February—Proceeds from sale of securities $6,950.

4.

Other disbursements:
February—payment of $5,110 cash dividend.

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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