Reference no: EM13483399

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

		January		February
Sales		$407,400		$465,600
Direct materials purchases		128,040		151,320
Direct labor		104,760		116,400
Manufacturing overhead		81,480		87,300
Selling and administrative expenses		91,956		100,104

 

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 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 $1,164 of depreciation per month.
Other data:

1.		Credit sales: November 2013, $302,640; December 2013, $372,480.
2.		Purchases of direct materials: December 2013, $116,400.
3.		Other receipts: January-Collection of December 31, 2013, notes receivable $17,460;
		February-Proceeds from sale of securities $6,984.
4.		Other disbursements: February-Payment of $5,820 cash dividend.

 

The company's cash balance on January 1, 2014, is expected to be $69,840. The company wants to maintain a minimum cash balance of $58,200.

A. Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for january and february.

B. Prepare a cash budget for january and febuary in columnar form.

Expected Collections from Customers
		January		February
November		$		$
December
January
February
Total collections		$		$

Expected Payments for Direct Materials
		January		February
December		$		$
January
February
Total payments		$		$