Lily 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 $302,400 4. 100,800 75,600 58,800 66,360 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 $840 of depreciation per month. February $336,000 105,000 84,000 63,000 71,400 Credit sales: November 2021, $210,000; December 2021, $268,800. Purchases of direct materials: December 2021, $84,000. Other receipts: January-Collection of December 31, 2021, notes receivable $12,600; February-Proceeds from sale of securities $5,040. Other disbursements: February-Payment of $5,040 cash dividend. The company's cash balance on January 1, 2022, is expected to be $50,400. The company wants to maintain a minimum cash balance of $42.000
Lily 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 $302,400 4. 100,800 75,600 58,800 66,360 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 $840 of depreciation per month. February $336,000 105,000 84,000 63,000 71,400 Credit sales: November 2021, $210,000; December 2021, $268,800. Purchases of direct materials: December 2021, $84,000. Other receipts: January-Collection of December 31, 2021, notes receivable $12,600; February-Proceeds from sale of securities $5,040. Other disbursements: February-Payment of $5,040 cash dividend. The company's cash balance on January 1, 2022, is expected to be $50,400. The company wants to maintain a minimum cash balance of $42.000
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.
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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
LILY COMPANY
Schedule of Expected Collections from Customers
February
$
$
January
Total payments $
$
LILYCOMPANY
Schedule of Expected Payments for Direct Materials
January
$
$
February
$
February
Transcribed Image Text:Lily Company prepares monthly cash budgets. Relevant data from operating budgets for 2022 are as follows. January February Sales
$302,400 $336,000 Direct materials purchases 100,800 105,000 Direct labor 75,600 84,000 Manufacturing overhead 58,800 63,000
Selling and administrative expenses 66,360 71,400 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 $840 of depreciation per month.
Other data: 1. Credit sales: November 2021, $210,000; December 2021, $268,800. 2. Purchases of direct materials: December 2021,
$84,000. 3. Other receipts: January-Collection of December 31, 2021, notes receivable $12,600; February-Proceeds from sale of
securities $5,040. 4. Other disbursements: February-Payment of $5,040 cash dividend. The company's cash balance on January 1,
2022, is expected to be $50,400. The company wants to maintain a minimum cash balance of $42000
Lily 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
$302,400
4.
100,800
75.600
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 $840 of depreciation per month.
58,800
66,360
February
$336,000
105,000
84,000
63,000
71,400
Credit sales: November 2021, $210,000; December 2021, $268,800.
Purchases of direct materials: December 2021, $84,000.
Other receipts: January-Collection of December 31, 2021, notes receivable $12,600;
February-Proceeds from sale of securities $5,040.
Other disbursements: February-Payment of $5,040 cash dividend.
The company's cash balance on January 1, 2022, is expected to be $50,400. The company wants to maintain a minimum cash balance
of $42.000
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