Question

Johnson Company's budgeted sales and direct materials purchases are as follows:

Budgeted Sales Budgeted D.M. Purchases

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January $251,000 $35,100

February $282,800 $40,100

March $342,600 $46,700

Johnson's sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the following sale, and 36% in the second month following sale; 4% are uncollectible. Johnson'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 purchases.

-Prepare a schedule of expected collections from customers for March.

Collections of January credit sales: $

Collections of February credit sales $

Collections of March credit sales $

March cash sales $

Total Collections:

-Prepare a schedule of expected payments for direct materials for March:

Payment of February credit purchases $

Payment of March credit purchases $

March cash purchases $

Total Payments:

Answer 1

Collections of January credit sales : $63,252 ($251,000*70%*36%)

Collections of February credit sales : $98,980 ($282,800*70%*50%)

Collections of March credit sales : $23,982 ($342,600*70%*10%)

March cash sales : $102,780 ($342,600*30%)

Total Collections : $288,994

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Payment of February credit purchases : $12,030 ($40,100*50%*60%)

Payment of March credit purchases : $9,340 ($46,700*50%*40%)

March cash purchases : $23,350 ($46,700*50%)

Total Payments : $44,720