Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem II Murdock Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are: January February Sales $350,000 $400,000 Direct materials purchases 120,000

image text in transcribed

Problem II Murdock Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are: January February Sales $350,000 $400,000 Direct materials purchases 120,000 110,000 Direct labor 85,000 112,000 Manufacturing overhead 60,000 75,000 Selling and Admin. Expenses 75,000 80,000 All sales are on account. Collections are expected to be 50% in the month of sale, 40% in the first month following the sale, and 10% in the second month following the sale. Thirty percent (30%) of direct materials purchases are paid in cash in the month of the 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 overhead and selling and administrative expenses. Other data: 1. Credit sales: November 2019, $200,000; December 2019, $280,000 2. Purchases of direct materials: December 2019, $80,000 3. Other receipts: January - collections of December 31 2019 interest receivable $5,000; February - proceeds from sale of securities $6,000 4. Other disbursements: February payment of $20,000 for land. The company's cash balance on January 1, 2020 is expected to be $50,000. The company wants to maintain a minimum cash balance of $40,000. Required: 1. Prepare schedules for expected collections from customers, expected payments for direct materials purchases. Prepare a cash budget for January and February

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

More Books

Students also viewed these Accounting questions

Question

Why should a firm want to create an ethical culture?

Answered: 1 week ago

Question

=+a) Comparing the ratings of a new telephone set on a

Answered: 1 week ago