Problem 9-4A (Part Level Submission) (Video)

Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are as follows.

		January		February
Sales		$406,800		$452,000
Direct materials purchases		135,600		141,250
Direct labor		101,700		113,000
Manufacturing overhead		79,100		84,750
Selling and administrative expenses		89,270		96,050

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 $1,130 of depreciation per month. Other data:

1.		Credit sales: November 2019, $282,500; December 2019, $361,600.
2.		Purchases of direct materials: December 2019, $113,000.
3.		Other receipts: JanuaryCollection of December 31, 2019, notes receivable $16,950;
		FebruaryProceeds from sale of securities $6,780.
4.		Other disbursements: FebruaryPayment of $6,780 cash dividend.

The companys cash balance on January 1, 2020, is expected to be $67,800. The company wants to maintain a minimum cash balance of $56,500

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 56500 0 December 108480 72320 January 203400 122040 February 0 226000 Total collections 368380 420360 Expected Payments for Direct Materials January February December 45200 0 January 81360 54240 February 0 84750 Total payments 126560 138990 Prepare a cash budget for January and February in columnar form. COLTER COMPANY Cash Budget January February >