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LRF Company's budgeted sales and direct materials purchases are as follows.
Budgeted Sales
Budgeted D.M. Purchases
January
$200,000
$30,000
February
220,000
35,000
March
270,000
41,000
LRF's sales are 40% cash and 60% 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. LRF'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.
Instructions
(a) Prepare a schedule of expected collections from customers for March.
(b) Prepare a schedule of expected payments for direct materials for March.
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