Sheffield Company prepares monthly cash budgets. Relevant data from operating budgets for 2025 are as follows. Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February January February Sales $453.600 $504,000 Direct materials purchases 151.200 157,500 Direct labor 113,400 126,000 Manufacturing overhead 88,200 94,500 Selling and administrative expenses 99,540 107.100 November December SHEFFIELD COMPANY Schedule of Expected Collections from Customers 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 Other data: January February Total collections 1 Credit sales: November 2024, $315,000: December 2024, $403,200 2 3. Purchases of direct materials: December 2024, $126.000. Other receipts: January-Collection of December 31, 2024, notes receivable $18,900; February-Proceeds from sale of securities $7.560 4. Other disbursements: February-Payment of $7.560 cash dividend. December January February $ January SHEFFIELD COMPANY February Schedule of Expected Payments for Direct Materials January February
Sheffield Company prepares monthly cash budgets. Relevant data from operating budgets for 2025 are as follows. Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February January February Sales $453.600 $504,000 Direct materials purchases 151.200 157,500 Direct labor 113,400 126,000 Manufacturing overhead 88,200 94,500 Selling and administrative expenses 99,540 107.100 November December SHEFFIELD COMPANY Schedule of Expected Collections from Customers 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 Other data: January February Total collections 1 Credit sales: November 2024, $315,000: December 2024, $403,200 2 3. Purchases of direct materials: December 2024, $126.000. Other receipts: January-Collection of December 31, 2024, notes receivable $18,900; February-Proceeds from sale of securities $7.560 4. Other disbursements: February-Payment of $7.560 cash dividend. December January February $ January SHEFFIELD COMPANY February Schedule of Expected Payments for Direct Materials January February
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Sheffield Company prepares monthly cash budgets. Relevant data from operating budgets for 2025 are as follows.
Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for
January and February.
January
February
Sales
$453,600 $504,000
Direct materials purchases
Direct labor
151.200
157,500
113,400
126,000
Manufacturing overhead
88,200
94,500
107,100
November
December
SHEFFIELD COMPANY
Schedule of Expected Collections from Customers
Selling and administrative expenses 99.540
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.
Other data:
January
February
Total collections
1
Credit sales: November 2024, $315,000; December 2024, $403,200.
2.
Purchases of direct materials: December 2024, $126,000.
3.
4.
Other receipts: January-Collection of December 31, 2024, 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, 2025, is expected to be $75,600. The company wants to maintain a minimum cash balance
of $63,000.
December
January
$
January
SHEFFIELD COMPANY
February
Schedule of Expected Payments for Direct Materials
February
Total payments
$
January
February
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