Concord Company prepares monthly cash budgets. Relevant data from operating budgets for 2022 are as follows. Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses Other data: 1. 2. 3. January $309,600 4. 103,200 77,400 60,200 67,940 February $344,000 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 expenses that include $860 of depreciation per month. 107,500 86,000 64,500 73,100 Credit sales: November 2021, $215,000; December 2021, $275,200. Purchases of direct materials: December 2021, $86,000. Other receipts: January-Collection of December 31, 2021, notes receivable $12,900; February-Proceeds from sale of securities $5,160. Other disbursements: February-Payment of $5,160 cash dividend. The company's cash balance on January 1, 2022, is expected to be $51,600. The company wants to maintain a minimum cash balance of $43,000.
Concord Company prepares monthly cash budgets. Relevant data from operating budgets for 2022 are as follows. Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses Other data: 1. 2. 3. January $309,600 4. 103,200 77,400 60,200 67,940 February $344,000 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 expenses that include $860 of depreciation per month. 107,500 86,000 64,500 73,100 Credit sales: November 2021, $215,000; December 2021, $275,200. Purchases of direct materials: December 2021, $86,000. Other receipts: January-Collection of December 31, 2021, notes receivable $12,900; February-Proceeds from sale of securities $5,160. Other disbursements: February-Payment of $5,160 cash dividend. The company's cash balance on January 1, 2022, is expected to be $51,600. The company wants to maintain a minimum cash balance of $43,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
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Transcribed Image Text:Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for
January and February.
November
December
January
February
December
Total collections $
January
CONCORD COMPANY
Schedule of Expected Collections from Customers
February
$
$
January
Total payments $
CONCORDCOMPANY
Schedule of Expected Payments for Direct Materials
$
January
$
$
February
Prepare a cash budget for January and February in columnar form.
February
CONCORD COMPANY
Cash Budget
$
January
$
February
BOOK
Transcribed Image Text:Concord Company prepares monthly cash budgets. Relevant data from operating budgets for 2022 are as follows.
Sales
Direct materials purchases
Direct labor
Manufacturing overhead
Selling and administrative expenses
Other data:
1.
2.
3.
January
$309,600
4.
103,200
77,400
60,200
67,940
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 expenses that include $860 of depreciation per month.
February
$344,000
107,500
86,000
64,500
73,100
Credit sales: November 2021, $215,000; December 2021, $275,200.
Purchases of direct materials: December 2021, $86,000.
Other receipts: January-Collection of December 31, 2021, notes receivable $12,900;
February-Proceeds from sale of securities $5,160.
Other disbursements: February-Payment of $5,160 cash dividend.
The company's cash balance on January 1, 2022, is expected to be $51,600. The company wants to maintain a minimum cash balance
of $43,000.
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