Sosa Company has provided the following budget information for the first quarter of
2016:
Total sales ................. $ 297,500
Budgeted purchases of direct materials ...... 39,450
Budgeted direct labor cost ........... 38,880
Budgeted manufacturing overhead costs:
Variable manufacturing overhead ........ 3,645
Depreciation ................600
Insurance and property taxes......... 9,120
Budgeted selling and administrative expenses:
Salaries expense ............... 5,000
Rent expense ................. 3,000
Insurance expense ............. 1,200
Depreciation expense ............. 100
Supplies expense .............. 2,975
Additional data related to the first quarter of 2016 for Sosa Company:
a. Capital expenditures include $36,000 for new manufacturing equipment, to be purchased and paid in the first quarter.
b. Cash receipts are 60% of sales in the quarter of the sale and 40% in the quarter following the sale.
c. Direct materials purchases are paid 70% in the quarter purchased and 30% 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 $42,000 and is paid in the quarter incurred.
f. Sosa 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 $14,000, in Accounts Receivable is $23,200, and in Accounts Payable is $10,500.
Requirements
1. Prepare Sosa Company’s schedule of cash receipts from customers and schedule of cash payments for the first quarter of 2016.
2. Prepare Sosa Company’s cash budget for the first quarter of 2016.