Question

Nieto Company's budgeted sales and direct materials purchases are as follows. Budgeted Sales Budgeted D.M. Purchases January $200,000 $30,000 February 220,000 36,000 March 250,000 38,000 Nieto'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. Nieto'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

Answer 1

Answer

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Explanation  

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Answer 2

The schedule of expected collections from customers for March is $219,900 and the schedule of expected payments for direct materials for March is $37,400.

Schedule of expected collections from customers

a.Schedule of expected cash collection

Cash sales $75,000

($250,000×30%)

Collection from credit sales

January $50,400

($200,000×70%×36%)

February $77,000

($220,000×70%×50%)

March  $17,500

($250,000×70%×10%)

Toatl cash collection $219,900

b. Schedule of expected payment for direct materials

Cash purchases $19,000

($38,000×50%)

Payment for credit sales

January $10,800

($36,000×50%×60%)

February $7,600

($38,000×50%×40%)

Total cash payment $37,400

Inconclusion the schedule of expected collections from customers for March is $219,900 and the schedule of expected payments for direct materials for March is $37,400.

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