Sheffield 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. (a) 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 $1,260 of depreciation per month. Your answer is partially correct. November January $453,600 December January 151,200 February 113,400 88,200 Credit sales: November 2021, $315,000; December 2021, $403,200. Purchases of direct materials: December 2021, $126,000. Other receipts: January-Collection of December 31, 2021, notes receivable $18,900; February-Proceeds from sale of securities $7,560. Other disbursements: February-Payment of $7,560 cash dividend. The company's cash balance on January 1, 2022, is expected to be $75,600. The company wants to maintain a minimum cash balance of $63,000. $ 99,540 Total collections $ Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. January February $504,000 63000 157,500 SHEFFIELD COMPANY Schedule of Expected Collections from Customers For the Two Months Ending February 28, 2022 120960 126,000 226800 94,500 0 107,100 410760 $ $ February 0 252000
Sheffield 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. (a) 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 $1,260 of depreciation per month. Your answer is partially correct. November January $453,600 December January 151,200 February 113,400 88,200 Credit sales: November 2021, $315,000; December 2021, $403,200. Purchases of direct materials: December 2021, $126,000. Other receipts: January-Collection of December 31, 2021, notes receivable $18,900; February-Proceeds from sale of securities $7,560. Other disbursements: February-Payment of $7,560 cash dividend. The company's cash balance on January 1, 2022, is expected to be $75,600. The company wants to maintain a minimum cash balance of $63,000. $ 99,540 Total collections $ Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. January February $504,000 63000 157,500 SHEFFIELD COMPANY Schedule of Expected Collections from Customers For the Two Months Ending February 28, 2022 120960 126,000 226800 94,500 0 107,100 410760 $ $ February 0 252000
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
Transcribed Image Text:Sheffield 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.
(a)
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 $1,260 of depreciation per month.
Your answer is partially correct.
November
January
$453,600
December
January
151,200
February
113,400
88,200
$
99,540
Credit sales: November 2021, $315,000; December 2021, $403,200.
Purchases of direct materials: December 2021, $126,000.
Other receipts: January-Collection of December 31, 2021, notes receivable $18,900;
February-Proceeds from sale of securities $7,560.
Other disbursements: February-Payment of $7,560 cash dividend.
The company's cash balance on January 1, 2022, is expected to be $75,600. The company wants to maintain a minimum cash balance
of $63,000.
Total collections $
Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for
January and February.
January
February
$504,000
63000
157,500
SHEFFIELD COMPANY
Schedule of Expected Collections from Customers
For the Two Months Ending February 28, 2022
120960
126,000
226800
94,500
0
107,100
410760
$
$
February
0
252000
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