1. The January 1, 2023, cash balance is expected to be $4,000. Hayes wishes to maintain a balance of at least $10,000. 2. Sales in each quarter are 18,000; 21,000; 24,000 and 27,000 respectively. 40% are collected in the quarter sold and 60% are collected in the following quarter. Accounts receivable of $6,000 at December 31, 2022, are expected to be collected in full in the first quarter of 2023. 3. Short-term investments are expected to be sold for $20,000 cash in the first quarter. 4. Direct materials costs for each quarter are: 2,520; 2,920; 3,320 and 3,720 respectively. 50.00% are paid in the quarter purchased and 50% are paid in the following quarter. Accounts payable of $1,000 at December 31, 2022, are expected to be paid in full in the first quarter of 2023. 5. Direct labor costs for each quarter are: 6,200; 7,200; 8,200 and 9,200 respectively 100% is paid in the quarter incurred. 6. Manufacturing overhead cost for each quarter are: 5,710; 6,010; 6,310 and 6,610 respectively. All items except depreciation are paid in the quarter incurred. Depreciation expense for the year was 1,520. 7. Selling and administrative expenses for each quarter are: 4,200; 4,400; 4,600 and 4,800 respectively. All items except depreciation are paid in the quarter incurred. Depreciation expense for the year was 400. 8. Management plans to purchase a truck in the second quarter for $10,000 cash. 9. Hayes makes equal quarterly payments of its estimated annual income taxes of 1,200. 10. Loans are repaid in the earliest quarter in which there is sufficient cash (that is, when the cash on hand exceeds the $10,000 minimum required balance). Interest paid on borrowing in the third quarter was 100, and fourth quarter was 250.

INSTRUCTIONS: 1 Prepare the Schedule of: (a) Expected Collections from Customers (b) Expected Payments for Direct Materials 2 Cash Budget for the year 2023

Answer 02:

Hayes Company

Schedule of Expected Collections from Customers

Collections by Quarter Sales 1 2 3 4

Accounts receivable, 12/31/22 First quarter Second quarter Third quarter Fourth quarter Total collections

Hayes Company Payments

Schedule of Expected Payments for Direct Materials

Payments by Quarter Purchases 1 2 3 4

Accounts payable, 12/31/22 First quarter Second quarter Third quarter Fourth quarter Total payments

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Hayes Company Cash Budget

For the Year Ending December 31, 2023 Quarter

1 2 3 4

Beginning cash balance Add: Receipts Collections from customers Sale of securities Total receipts Total available cash Less: Disbursements Direct materials Direct labor Manufacturing overhead Selling and administrative expenses Purchase of truck Income tax expense Total disbursements

Excess (deficiency) of available cash over cash disbursements

Financing Add: Borrowings Less: Repayments including interest Ending cash balance