Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2013 are:
January
February
Sales$374,850$428,400
Direct materials purchases117,810139,230
Direct labor96,390107,100
Manufacturing overhead74,97080,325
Selling and administrative expenses84,60992,106
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 $1,071 of depreciation per month.
Other data:
1.Credit sales: November 2012, $278,460; December 2012, $342,720.
2.Purchases of direct materials: December 2012, $107,100.
3.Other receipts: January—Collection of December 31, 2012, notes receivable $16,065;
February—Proceeds from sale of securities $6,426.
4.Other disbursements: February—Withdrawal of $5,355 cash for personal use of owner, Nick Haniwall.
The company’s cash balance on January 1, 2013, is expected to be $64,260. The company wants to maintain a minimum cash balance of $53,550.
