Question 1

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

		January		February
Sales		$430,560		$478,400
Direct materials purchases		143,520		149,500
Direct labor		107,640		119,600
Manufacturing overhead		83,720		89,700
Selling and administrative expenses		94,484		101,660

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 $1,196 of depreciation per month. Other data:

1.		Credit sales: November 2016, $299,000; December 2016, $382,720.
2.		Purchases of direct materials: December 2016, $119,600.
3.		Other receipts: JanuaryCollection of December 31, 2016, notes receivable $17,940;
		FebruaryProceeds from sale of securities $7,176.
4.		Other disbursements: FebruaryPayment of $7,176 cash dividend.

The companys cash balance on January 1, 2017, is expected to be $71,760. The company wants to maintain a minimum cash balance of $59,800.

Expected Collections from Customers January February November December January February Total collections s Expected Payments for Direct Materials January February December January February Total payments s