Question

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

		Budgeted Sales		Budgeted D.M. Purchases
January		$276,100		$33,200
February		237,500		39,600
March		261,400		53,100

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
select collections Payment of February credit purchasesFebruary cash salesMarch cash salesJanuary cash salesPayment of March credit purchasesCollection of February credit salesCollection of March credit salesCollection of January credit salesMarch cash purchases March cash salesCollection of March credit salesCollection of February credit salesCollection of January credit salesFebruary cash salesJanuary cash salesMarch cash purchasesPayment of March credit purchasesPayment of February credit purchases		$enter a dollar amount
select collectionsMarch cash salesCollection of February credit salesCollection of March credit salesFebruary cash salesMarch cash purchasesJanuary cash salesCollection of January credit salesPayment of February credit purchasesPayment of March credit purchases March cash salesCollection of March credit salesCollection of February credit salesCollection of January credit salesFebruary cash salesJanuary cash salesMarch cash purchasesPayment of March credit purchasesPayment of February credit purchases		enter a dollar amount
select collectionsPayment of March credit purchasesMarch cash purchasesMarch cash salesJanuary cash salesFebruary cash salesCollection of January credit salesPayment of February credit purchasesCollection of February credit salesCollection of March credit sales March cash salesCollection of March credit salesCollection of February credit salesCollection of January credit salesFebruary cash salesJanuary cash salesMarch cash purchasesPayment of March credit purchasesPayment of February credit purchases		enter a dollar amount
select collectionsCollection of January credit salesFebruary cash salesCollection of February credit salesMarch cash purchasesPayment of March credit purchasesMarch cash salesPayment of February credit purchasesCollection of March credit salesJanuary cash sales March cash salesCollection of March credit salesCollection of February credit salesCollection of January credit salesFebruary cash salesJanuary cash salesMarch cash purchasesPayment of March credit purchasesPayment of February credit purchases		enter a dollar amount
Total collections		$enter a total amount for this column

(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
select paymentsCollection of February credit salesMarch cash purchasesJanuary cash salesMarch cash salesCollection of March credit salesPayment of March credit purchasesPayment of February credit purchasesCollection of January credit salesFebruary cash sales March cash salesCollection of March credit salesCollection of February credit salesCollection of January credit salesFebruary cash salesJanuary cash salesMarch cash purchasesPayment of March credit purchasesPayment of February credit purchases		$enter a dollar amount
select paymentsJanuary cash salesCollection of March credit salesMarch cash salesPayment of March credit purchasesFebruary cash salesCollection of February credit salesCollection of January credit salesMarch cash purchasesPayment of February credit purchases March cash salesCollection of March credit salesCollection of February credit salesCollection of January credit salesFebruary cash salesJanuary cash salesMarch cash purchasesPayment of March credit purchasesPayment of February credit purchases		enter a dollar amount
select paymentsCollection of February credit salesMarch cash salesMarch cash purchasesPayment of March credit purchasesJanuary cash salesFebruary cash salesPayment of February credit purchasesCollection of March credit salesCollection of January credit sales March cash salesCollection of March credit salesCollection of February credit salesCollection of January credit salesFebruary cash salesJanuary cash salesMarch cash purchasesPayment of March credit purchasesPayment of February credit purchases		enter a dollar amount
Total payments		$enter a total amount for this column

Answer 1

Solution

NIETO COMPANY
Expected Collections from Customers
		March
Cash sales march		$        78,420
Collection of March credit sales		$        18,298
Collection of February credit sales		$        83,125
Collection of January credit sales		$        69,577
Total collections		$      249,420

Working

	January	February	March
Sales	$ 276,100.00	$                 237,500.00	$ 261,400.00
Cash sales	$    82,830.00	$                   71,250.00	$    78,420.00
Credit sales	$ 193,270.00	$                 166,250.00	$ 182,980.00

Requirement 2

NIETO COMPANY
Expected Payments for Direct materials
March Cash Purchases	$    26,550.00
Payment for march credit Purchases	$    10,620.00
Payment for February credit Purchases	$    11,880.00
Total Payments	$    49,050.00

.

Calculation of Payment for February Purchase
February Purchase	$    39,600.00
Less: Paid in cash in February	$    19,800.00
Purchase on Account	$    19,800.00
On account Purchases Paid in February(19800*40%)	$      7,920.00
On account Purchases Paid in march(19800*60%)	$    11,880.00