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Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February.

Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Prepare a cash budget for January and February in columnar form. > LILY COMPANY Cash Budget $ January
Transcribed Image Text:Prepare a cash budget for January and February in columnar form. > LILY COMPANY Cash Budget $ January
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. 4. 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 $1,100 of depreciation per month. November December January February Credit sales: November 2021, $275,000; December 2021, $352,000. Purchases of direct materials: December 2021, $110,000. Other receipts: January-Collection of December 31, 2021, notes receivable $16,500; February-Proceeds from sale of securities $6,600. Other disbursements: February-Payment of $6,600 cash dividend. Total collections The company's cash balance on January 1, 2022, is expected to be $66,000. The company wants to maintain a minimum cash balance of $55,000. December Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. January February Total payments January $396,000 $ $ 132,000 99,000 77,000 $ 86,900 $ January LILY COMPANY Schedule of Expected Collections from Customers For the Two Months Ending February 28, 2022 January 55000 105600 February $440,000 198000 137.500 110,000 358600 82,500 93,500 LILYCOMPANY Schedule of Expected Payments for Direct Materials For the Two Months Ending February 28, 2022 44000 79200 123200 $ February $ February 70400 118800 220000 409200 52800 82500 135300
Transcribed Image Text: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. 4. 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 $1,100 of depreciation per month. November December January February Credit sales: November 2021, $275,000; December 2021, $352,000. Purchases of direct materials: December 2021, $110,000. Other receipts: January-Collection of December 31, 2021, notes receivable $16,500; February-Proceeds from sale of securities $6,600. Other disbursements: February-Payment of $6,600 cash dividend. Total collections The company's cash balance on January 1, 2022, is expected to be $66,000. The company wants to maintain a minimum cash balance of $55,000. December Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. January February Total payments January $396,000 $ $ 132,000 99,000 77,000 $ 86,900 $ January LILY COMPANY Schedule of Expected Collections from Customers For the Two Months Ending February 28, 2022 January 55000 105600 February $440,000 198000 137.500 110,000 358600 82,500 93,500 LILYCOMPANY Schedule of Expected Payments for Direct Materials For the Two Months Ending February 28, 2022 44000 79200 123200 $ February $ February 70400 118800 220000 409200 52800 82500 135300
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