Problem 21-4A

Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows:

January

February

Sales $370,800 $412,000

Direct materials purchases 123,600 128,750

Direct labor 92,700 103,000

Manufacturing overhead 72,100 77,250

Selling and administrative expenses 81,370 87,550

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 $1,030 of depreciation per month.

Other data:

1. Credit sales: November 2016, $257,500; December 2016, $329,600.

2. Purchases of direct materials: December 2016, $103,000.

3. Other receipts: JanuaryCollection of December 31, 2016, notes receivable $15,450;

FebruaryProceeds from sale of securities $6,180.

4. Other disbursements: FebruaryPayment of $6,180 cash dividend.

The companys cash balance on January 1, 2017, is expected to be $61,800. The company wants to maintain a minimum cash balance of $51,500.

Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February.

Expected Collections from Customers

January

February

November

$

$

December

January

February

Total collections $

$

Expected Payments for Direct Materials

January

February

December

$

$

January

February

Total payments $

$

LINK TO TEXT

Prepare a cash budget for January and February in columnar form. (Do not leave any answer field blank. Enter 0 for amounts.)

COLTER COMPANY

Cash Budget

January

February

$

$

:

:

:

:

$

$