Question

Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows: February January Sales $370,800 $412,000 Direct materials purchases 123,600 128,750 Direct labor 92,700 103,000 Manufacturing overhead 77,250 72,100 Selling and administrative expenses 81,370 87,550 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 enses that include $1,030 of depreciation per month. Other data: Credit sales: November 2016, $257,500; December 2016, $329,600. 1. Purchases of direct materials: December 2016, $103,000 2. 3. Other receipts: January-Collection of December 31, 2016, notes receivable $15,450; February-Proceeds from sale of securities $6,180. 4 Other disbursements: February-Payment of $6,180 cash dividend. The company's cash balance on January 1, 2017, is expected to be $61,800. The company wants to maintain a minimum cash balance of $51,500.

Answer 1

1.

Expected collections from customers
	January	February
November	$        51,500.00
December	$        98,880.00	$         65,920.00
January	$      185,400.00	$       111,240.00
February		$       206,000.00
Total Collections	$     335,780.00	$      383,160.00

2.

Expected payments for Direct Materials
	January	February
December	$        41,200.00
January	$        74,160.00	$         49,440.00
February		$         77,250.00
Total Payments	$     115,360.00	$      126,690.00

3.

Cash Budget
	January	February
Beginning Cash Balance	$        61,800.00	$         52,530.00
Add : Collections from customers	$      335,780.00	$       383,160.00
Other receipts - Notes Receivable	$        15,450.00
Proceeds from sale of security		$           6,180.00
Total Cash Available	$      413,030.00	$       441,870.00
Less: Cash Disburements
Purchase of Inventory	$      115,360.00	$       126,690.00
Direct Labor	$        92,700.00	$       103,000.00
Manufacturing Overhead	$        72,100.00	$         77,250.00
Selling Expenses	$        80,340.00	$         86,520.00
Dividend Paid		$           6,180.00
Total Cash Disbursements	$      360,500.00	$       399,640.00
Excess( Deficiency) of Cash Available over disbusements	$        52,530.00	$         42,230.00
Financing :
Borrowings		$           9,270.00
Repayments
interest
Total Financing	$                      -	$           9,270.00
Ending Cash Balance	$        52,530.00	$         51,500.00