Question
Below is summary monthly income statement data for Ace Manufacturing Company. January February Sales revenue $250,000 $275,000 Direct materials purchases 60,000 70,000 Direct labor 88,000
Below is summary monthly income statement data for Ace Manufacturing Company.
January | February | |
---|---|---|
Sales revenue | $250,000 | $275,000 |
Direct materials purchases | 60,000 | 70,000 |
Direct labor | 88,000 | 95,000 |
Manufacturing overhead | 50,000 | 52,000 |
Selling and administrative expenses | 45,000 | 46,000 |
All sales are on account, and history has shown that 40% of sales are expected to be collected in the month of the sale, with 60% collected the following month.
Direct materials are paid 50% in the month of purchase and 50% the following month. All other expenses are paid as incurred. All costs shown are cash-based costs (depreciation has already been eliminated).
Other data:
December sales were $230,000.
Purchases of direct materials purchased in December were $50,000.
The company has interest payments due of $5,000 per month.
The cash balance on January 1 was $15,000.
Instructions
Prepare schedules for expected collections from customers and expected payments for direct materials purchases.
Prepare a cash budget for January and February.
Cash collections | |||
---|---|---|---|
Credit Sales | January | February | |
December | Amount | Amount | |
January | Amount | Amount | Amount |
February | Amount | Amount | Amount |
Amount | Amount | Amount | |
Cash budget | ||
---|---|---|
January | February | |
Beginning cash | Amount | Amount |
Cash collections | Amount | Amount |
Direct materials purchases | Amount | Amount |
Direct labor | Amount | Amount |
Manufacturing overhead | Amount | Amount |
Selling and administrative expenses | Amount | Amount |
Interest payment | Amount | Amount |
Ending cash | Amount | Amount |
Cash disbursements for materials | |||
---|---|---|---|
Purchases | January | February | |
December | Amount | Amount | Amount |
January | Amount | Amount | Amount |
February | Amount | Amount | Amount |
Amount | Amount | Amount |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started