Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

P9.4A (LO 4), AP Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are as follows. Prepare cash budget for 2

image text in transcribed
image text in transcribed
P9.4A (LO 4), AP Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are as follows. Prepare cash budget for 2 months. Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses January February $360,000 $400,000 120,000 125,000 90,000 100,000 70,000 75,000 79,000 85,000 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 $1,000 of depreciation per month. Other data: 1. Credit sales: November 2019, $250,000; December 2019, $320,000.A 2. Purchases of direct materials: December 2019, $100,000. 3. Other receipts: January-collection of December 31, 2019, notes receivable $15,000; February-proceeds from sale of securities $6,000. Other data: 1. Credit sales: November 2019, $250,000; December 2019, $320,000. 2. Purchases of direct materials: December 2019, $100,000. 3. Other receipts: January-collection of December 31, 2019, notes receivable $15,000; February-proceeds from sale of securities $6,000. 4. Other disbursements: February-payment of $6,000 cash dividend. The company's cash balance on January 1, 2020, is expected to be $60,000. The company wants to maintain a minimum cash balance of $50,000. Instructions a. Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. January: collections $326,000; payments $112,000 b. Prepare a cash budget for January and February in columnar form. Ending cash balance: January $51,000 February $50,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Statement Fraud Strategies For Detection And Investigation

Authors: Gerard M. Zack

1st Edition

1118301552, 9781118301555

More Books

Students also viewed these Accounting questions

Question

2. Describe why we form relationships

Answered: 1 week ago

Question

5. Outline the predictable stages of most relationships

Answered: 1 week ago