Problem 9-4A (Video)

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

January

February

Sales$360,000$400,000

Direct materials purchases120,000125,000

Direct labor90,000100,000

Manufacturing overhead70,00075,000

Selling and administrative expenses79,00085,000

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.

2.Purchases of direct materials: December 2019, $100,000.

3.Other receipts: JanuaryCollection of December 31, 2019, notes receivable $15,000;

FebruaryProceeds from sale of securities $6,000.

4.Other disbursements: FebruaryPayment of $6,000 cash dividend.

The companys cash balance on January 1, 2020, is expected to be $60,000. The company wants to maintain a minimum cash balance of $50,000. 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$$

Prepare a cash budget for January and February in columnar form. COLTER COMPANY Cash Budget

For the Two Months Ending February 28, 2020February 28, 2020For the Quarter Ending February 28, 2020

January

February

Ending Cash BalanceManufacturing OverheadNotes ReceivableExcess (Deficiency) of Available Cash Over Cash DisbursementsTotal DisbursementsReceiptsRepaymentsTotal ReceiptsDirect MaterialsSale of SecuritiesBorrowingsDisbursementsFinancingCollections from CustomersDirect LaborSelling and Administrative ExpensesTotal Available CashCash DividendBeginning Cash Balance

$$

AddLess

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BorrowingsExcess (Deficiency) of Available Cash Over Cash DisbursementsCollections from CustomersTotal DisbursementsTotal Available CashManufacturing OverheadTotal ReceiptsDirect LaborDirect MaterialsRepaymentsFinancingDisbursementsEnding Cash BalanceNotes ReceivableReceiptsSale of SecuritiesSelling and Administrative ExpensesCash DividendBeginning Cash Balance

Repayments Receipts Cash Dividend Excess (Deficiency) of Available Cash Over Cash Disbursements Sale of Securities Selling and Administrative Expenses Total Available Cash Notes Receivable Total Disbursements Total Receipts Beginning Cash Balance Collections from Customers Borrowings Disbursements Direct Labor Direct Materials Ending Cash Balance Financing Manufacturing Overhead

Manufacturing Overhead Notes Receivable Sale of Securities Beginning Cash Balance Total Disbursements Excess (Deficiency) of Available Cash Over Cash Disbursements Total Receipts Repayments Direct Materials Receipts Collections from Customers Selling and Administrative Expenses Total Available Cash Cash Dividend Borrowings Direct Labor Disbursements Financing Ending Cash Balance

Cash Dividend Beginning Cash Balance Total Receipts Disbursements Direct Labor Borrowings Notes Receivable Total Disbursements Financing Total Available Cash Collections from Customers Direct Materials Manufacturing Overhead Receipts Sale of Securities Ending Cash Balance Repayments Selling and Administrative Expenses Excess (Deficiency) of Available Cash Over Cash Disbursements

Disbursements Total Receipts Sale of Securities Total Disbursements Cash Dividend Total Available Cash Ending Cash Balance Manufacturing Overhead Receipts Beginning Cash Balance Notes Receivable Borrowings Excess (Deficiency) of Available Cash Over Cash Disbursements Repayments Selling and Administrative Expenses Collections from Customers Direct Labor Direct Materials Financing

BorrowingsFinancingReceiptsDirect MaterialsCollections from CustomersTotal ReceiptsBeginning Cash BalanceRepaymentsTotal Available CashCash DividendTotal DisbursementsEnding Cash BalanceDisbursementsManufacturing OverheadDirect LaborExcess (Deficiency) of Available Cash Over Cash DisbursementsNotes ReceivableSelling and Administrative ExpensesSale of Securities

AddLess

:

Manufacturing OverheadFinancingExcess (Deficiency) of Available Cash Over Cash DisbursementsRepaymentsCash DividendDirect LaborTotal Available CashBorrowingsBeginning Cash BalanceSelling and Administrative ExpensesEnding Cash BalanceTotal DisbursementsSale of SecuritiesNotes ReceivableReceiptsTotal ReceiptsDirect MaterialsCollections from CustomersDisbursements

Ending Cash Balance Cash Dividend Excess (Deficiency) of Available Cash Over Cash Disbursements Beginning Cash Balance Manufacturing Overhead Selling and Administrative Expenses Direct Labor Collections from Customers Direct Materials Total Disbursements Total Available Cash Financing Disbursements Notes Receivable Borrowings Total Receipts Receipts Repayments Sale of Securities

Total Available Cash Cash Dividend Selling and Administrative Expenses Total Disbursements Total Receipts Borrowings Direct Materials Beginning Cash Balance Excess (Deficiency) of Available Cash Over Cash Disbursements Financing Collections from Customers Repayments Manufacturing Overhead Notes Receivable Receipts Direct Labor Disbursements Ending Cash Balance Sale of Securities

Excess (Deficiency) of Available Cash Over Cash Disbursements Disbursements Notes Receivable Financing Receipts Collections from Customers Sale of Securities Manufacturing Overhead Ending Cash Balance Direct Materials Total Disbursements Repayments Selling and Administrative Expenses Borrowings Direct Labor Beginning Cash Balance Total Available Cash Total Receipts Cash Dividend

Total Available Cash Borrowings Direct Labor Manufacturing Overhead Disbursements Repayments Total Receipts Cash Dividend Direct Materials Ending Cash Balance Receipts Beginning Cash Balance Financing Selling and Administrative Expenses Total Disbursements Excess (Deficiency) of Available Cash Over Cash Disbursements Notes Receivable Collections from Customers Sale of Securities

Total Disbursements Disbursements Direct Materials Direct Labor Ending Cash Balance Borrowings Excess (Deficiency) of Available Cash Over Cash Disbursements Financing Manufacturing Overhead Notes Receivable Selling and Administrative Expenses Receipts Repayments Total Receipts Cash Dividend Sale of Securities Total Available Cash Collections from Customers Beginning Cash Balance

Total Available Cash Beginning Cash Balance Direct Labor Cash Dividend Sale of Securities Total Disbursements Total Receipts Borrowings Financing Collections from Customers Excess (Deficiency) of Available Cash Over Cash Disbursements Direct Materials Disbursements Selling and Administrative Expenses Ending Cash Balance Manufacturing Overhead Notes Receivable Receipts Repayments

Total DisbursementsTotal ReceiptsManufacturing OverheadCollections from CustomersCash DividendBeginning Cash BalanceNotes ReceivableFinancingDirect LaborBorrowingsRepaymentsDirect MaterialsDisbursementsExcess (Deficiency) of Available Cash Over Cash DisbursementsEnding Cash BalanceReceiptsSale of SecuritiesSelling and Administrative ExpensesTotal Available Cash

Notes ReceivableCollections from CustomersSale of SecuritiesDirect MaterialsCash DividendTotal DisbursementsDisbursementsBeginning Cash BalanceManufacturing OverheadExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingDirect LaborReceiptsRepaymentsEnding Cash BalanceSelling and Administrative ExpensesTotal Available CashTotal ReceiptsBorrowings

AddLess

:

RepaymentsDirect MaterialsCash DividendManufacturing OverheadSale of SecuritiesSelling and Administrative ExpensesBeginning Cash BalanceFinancingBorrowingsTotal ReceiptsCollections from CustomersNotes ReceivableReceiptsDisbursementsTotal Available CashTotal DisbursementsDirect LaborEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash Disbursements

AddLess

:

Excess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadTotal Available CashBeginning Cash BalanceCollections from CustomersCash DividendTotal ReceiptsRepaymentsReceiptsDirect LaborNotes ReceivableBorrowingsDirect MaterialsDisbursementsEnding Cash BalanceSale of SecuritiesSelling and Administrative ExpensesTotal Disbursements

Notes ReceivableCash DividendEnding Cash BalanceFinancingManufacturing OverheadReceiptsRepaymentsExcess (Deficiency) of Available Cash Over Cash DisbursementsSale of SecuritiesDirect LaborCollections from CustomersSelling and Administrative ExpensesTotal DisbursementsTotal Available CashBeginning Cash BalanceTotal ReceiptsBorrowingsDirect MaterialsDisbursements

$$