Sheffield Company prepares monthly cash budgets. Relevant data from operating budgets for 2022 are as follows....

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: 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 $1,300 of depreciation per month. January February $468,000 $520,000 156,000 162,500 117,000 130,000 91,000 97,500 110,500 2. 102,700 1. Credit sales: November 2021, $325,000; December 2021, $416,000. Purchases of direct materials: December 2021, $130,000. Other receipts: January-Collection of December 31, 2021, notes receivable $19,500; February-Proceeds from sale of securities $7,800. Other disbursements: February-Payment of $7,800 cash dividend. 3. The company's cash balance on January 1, 2022, is expected to be $78,000. The company wants to maintain a minimum cash balance of $65,000. Prepare a cash budget for January and February using columns for each month LORCH COMPANY Cash Budget For the Two Months Ending February 28, 2021 Jan Feb 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: 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 $1,300 of depreciation per month. January February $468,000 $520,000 156,000 162,500 117,000 130,000 91,000 97,500 110,500 2. 102,700 1. Credit sales: November 2021, $325,000; December 2021, $416,000. Purchases of direct materials: December 2021, $130,000. Other receipts: January-Collection of December 31, 2021, notes receivable $19,500; February-Proceeds from sale of securities $7,800. Other disbursements: February-Payment of $7,800 cash dividend. 3. The company's cash balance on January 1, 2022, is expected to be $78,000. The company wants to maintain a minimum cash balance of $65,000. Prepare a cash budget for January and February using columns for each month LORCH COMPANY Cash Budget For the Two Months Ending February 28, 2021 Jan Feb

Answer rating: 100% (QA)

1 sheffield Company Schedule of expected cash collections 2 for th... View the full answer