Humble Company has provided the following budget information for the first quarter of 2016:
Total sales ....................$ 208,000
Budgeted purchases of direct materials ....... 40,150
Budgeted direct labor cost .............. 37,300
Budgeted manufacturing overhead costs:
Variable manufacturing overhead .......... 1,119
Depreciation .................. 1,000
Insurance and property taxes........... 6,833
Budgeted selling and administrative expenses:
Salaries expense ...............6,000
Rent expense .................1,500
Insurance expense ..............1,700
Depreciation expense .............. 200
Supplies expense ............... 10,400
Additional data related to the first quarter of 2016 for Humble Company:
a. Capital expenditures include $37,000 for new manufacturing equipment to be purchased and paid in the first quarter.
b. Cash receipts are 75% of sales in the quarter of the sale and 25% in the quarter following the sale.
c. Direct materials purchases are paid 50% in the quarter purchased and 50% in the next quarter.
d. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred.
e. Income tax expense for the first quarter is projected at $50,000 and is paid in the quarter incurred.
f. Humble Company expects to have adequate cash funds and does not anticipate borrowing in the first quarter.
g. The December 31, 2015, balance in Cash is $40,000, in Accounts Receivable is $16,700, and in Accounts Payable is $15,200.
Requirements
1. Prepare Humble Company’s schedule of cash receipts from customers and schedule of cash payments for the first quarter of 2016.
2. Prepare Humble Company’s cash budget for the first quarter of 2016.