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 36,000 March 270,000 40,000 LRF’s sales are 30% cash and 70% 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.

AppendixLO1