Templeton Corporation produces windows used in residential construction. The dollar amount of the company’s quarterly sales and direct materials purchases are projected to be as follows.

Assume all sales are made on credit. The company expects to collect 60 percent of sales in the quarter of sale and 40 percent the quarter following the sale.

Accounts receivable at the end of last year totaled \($3\) million, all of which will be collected in the first quarter of the coming year.

Assume all direct materials purchases are on credit. The company expects to pay 70 percent of purchases in the quarter of purchase and 30 percent the following quarter. Accounts payable at the end of last year totaled \($325,000,\) all of which will be paid in the first quarter of this coming year.

Required

a. Prepare a budget for cash collections from sales. Use a format similar to the top section of Exhibit 9.9.

b. Prepare a budget for cash payments for purchases of materials. Use a format similar to the middle section of Exhibit 9.9. Round to the nearest dollar.

Exhibit 9.9

Transcribed Image Text:

1st 2nd 3rd $11,000,000 $11,440,000 Sales Direct Materials Purchases $8,800,000 $ 820,908 $ 995,346 $ 1,017,504 4th $10,560,000 $ 947,352