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
<u>Collections for January</u>
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 <u>$ 180,000
</u>
Total Collections for January $ 326,000
<u>Collections for February</u>
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
<u>Payments for January</u>
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 <u>$ 72,000</u>
Payments for January $ 112,000
<u>Payments for February</u>
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 <u>$ 75,000</u>
Payments for February $ 123,000
