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PEI-43 Derby Company prepares monthly cash budgets. Relevant data from operating budgets for 2017:|r are: January February Sales $350,000 $400,000 Direct materials purchases 1 10,000
PEI-43 Derby Company prepares monthly cash budgets. Relevant data from operating budgets for 2017:|r are: January February Sales $350,000 $400,000 Direct materials purchases 1 10,000 120,000 Direct labor 35,000 1 15,000 Manufacturing overhead 150,000 25,000 Selling and administrative expenses 25,000 30,000 All sales are on account. Collections are expected to be 60% in the month of sale, 25% in the rst month following the sale, and 15% in the second month following the sale. Thirty percent {30%) 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. Depreciation has been excluded from manufacturing over head and selling and administrative expenses. lU'ther data: 1. Credit sales: November 2016, $200,000; December 2016, $290,000. 2. Purchases of direct materials: December 2016:, $90,000. 3. Dther receipts: Januarycollection of December 31, 2016, interest receivable $3,000; Februaryproceeds from sale of securities $5,000. 4. Dther disbursements: Februarypaym'rent of $20,000 for land. The company's cash balance on January 1, 201?, is expected to be $50,000. The com pany wants to maintain a minimum cash balance of $40,000. Insmfions {a} Prepare schedules for (1} expected collections from customers and (2) expected pay ments for direct materials purchases. {13) Prepare a cash budget for January and February in columnar form
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