Nagaland plc’s budgeted sales and direct materials purchases are as follows.

Nagaland’s sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Nagaland’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.

Instructions

a. Prepare a schedule of expected collections from customers for March.

b. Prepare a schedule of expected payments for direct materials for March.

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Budgeted Sales Budgeted D.M. Purchases £200,000 January February March £30,000 36,000 220,000 250,000 38,000