Question

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

Answer 1

Answer:

1. Collections from customers for January $ 326,000

  Collections from customers for February $ 372,000

2. Payments for purchases of Direct Materials - January $ 112,000

   Payments for purchases of Direct materials - February $ 123,000

Explanation:

Computations for collections from customers

Collections for January

Collections from November sales

- 20 % ( second month of sales) $ 250,000 November sales

Collections from November sales 20 % * $ 250,000                  $ 50,000

Collections from December sales  

- 30 % ( first month after sales) $ 320,000

Collections from December sales 30 % * $ 320,000                  $ 96,000

Collections from January sales

- 50 % ( month of sales) * $ 360,000 January sales

Collections from January sales 50 % * $ 360,000                      $ 180,000

Total Collections for January                                                       $ 326,000

Collections for February

Collections from December sales  

- 20 % ( second month after sales) $ 320,000

Collections from December sales 20 % * $ 320,000                $ 64,000

Collections from January sales

- 30 % ( first month of sales) * $ 360,000 January sales

Collections from January sales 30 % * $ 360,000                    $ 108,000

Collections from February sales

- 50 % ( month of sales) * $ 400,000 ( February sales)

Collections from February sales 50 % * $ 400,000                  $ 200,000

Total collections for February                                                    $ 372,000

Computations for payments for Direct material purchases  

Payments for January

Payments for December purchases

- 40 % ( month after purchase) $ 100,000 (December purchase)

Payments for December purchases 40 % * $ 100,000              $ 40,000

Payments for January purchases

- 60 % ( month of purchase) $120,000

Payments for January purchases 60 % * $ 120,000                  $ 72,000

Payments for January                                                                  $ 112,000

Payments for February

Payments for January purchases

- 40 % ( month after purchase) $ 120,000 (January purchase)

Payments for January purchases 40 % * $ 120,000              $ 48,000

Payments for February purchases

- 60 % ( month of purchase) $125,000

Payments for February purchases 60 % * $ 125,000                  $ 75,000

Payments for February                                                                $ 123,000