Question

Exercise 21-17

Nieto Company’s budgeted sales and direct materials purchases are as follows.

		Budgeted Sales		Budgeted D.M. Purchases
January		$237,300		$33,500
February		230,100		38,900
March		329,800		38,300

Nieto’s sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Nieto’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.

(a)

Prepare a schedule of expected collections from customers for March. (Round answers to 0 decimal places, e.g. 2,500.)

NIETO COMPANY Expected Collections from Customers
		March
February cash salesCollection of January credit salesCollection of February credit salesMarch cash salesJanuary cash salesMarch cash purchasesPayment of March credit purchasesCollection of March credit salesPayment of February credit purchases		$
Payment of March credit purchasesMarch cash salesCollection of March credit salesPayment of February credit purchasesCollection of February credit salesCollection of January credit salesFebruary cash salesJanuary cash salesMarch cash purchases
Collection of February credit salesCollection of January credit salesPayment of March credit purchasesFebruary cash salesPayment of February credit purchasesJanuary cash salesMarch cash purchasesMarch cash salesCollection of March credit sales
Collection of March credit salesMarch cash salesCollection of February credit salesCollection of January credit salesJanuary cash salesPayment of March credit purchasesPayment of February credit purchasesFebruary cash salesMarch cash purchases
Total collections		$

(b)

Prepare a schedule of expected payments for direct materials for March. (Round answers to 0 decimal places, e.g. 2,500.)

NIETO COMPANY Expected Payments for Direct Materials
		March
Collection of March credit salesMarch cash salesCollection of February credit salesFebruary cash salesPayment of February credit purchasesJanuary cash salesMarch cash purchasesCollection of January credit salesPayment of March credit purchases		$
Payment of February credit purchasesPayment of March credit purchasesMarch cash salesCollection of March credit salesMarch cash purchasesFebruary cash salesCollection of February credit salesCollection of January credit salesJanuary cash sales
January cash salesMarch cash purchasesFebruary cash salesPayment of March credit purchasesMarch cash salesPayment of February credit purchasesCollection of February credit salesCollection of January credit salesCollection of March credit sales
Total payments		$

Answer 1

1) Schedule of expected cash collection

	March
Cash Sales (329800*30%)	98940
January Sales (237300*70%*36%)	59800
February Sales (230100*70%*50%)	80535
March Sales	23086
Total Cash collection	262361

2) Schedule of expected cash payment

	March
Cash Purchase (38300*50%)	19150
Credit purchase of march (19150*40%)	7660
Credit purchase of Feb (38900*50%*60%)	11670
Total payment	38480