Question

Nieto Company’s budgeted sales and direct materials purchases are as follows.

		Budgeted Sales		Budgeted D.M. Purchases
January		$237,000		$33,500
February		230,100		38,900
March		329,800		38,300

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.

(a)

Prepare a schedule of expected collections from customers for March.

NIETO COMPANY Expected Collections from Customers
		March
select an item                                                          January cash salesMarch cash purchasesCollection of February credit salesCollection of March credit salesFebruary cash salesCollection of January credit salesPayment of March credit purchasesMarch cash salesPayment of February credit purchases		$enter a dollar amount
select an item                                                          Collection of February credit salesMarch cash salesCollection of March credit salesMarch cash purchasesPayment of February credit purchasesFebruary cash salesJanuary cash salesPayment of March credit purchasesCollection of January credit sales		enter a dollar amount
select an item                                                          Collection of March credit salesMarch cash purchasesPayment of March credit purchasesPayment of February credit purchasesJanuary cash salesFebruary cash salesCollection of February credit salesMarch cash salesCollection of January credit sales		enter a dollar amount
select an item                                                          March cash purchasesCollection of February credit salesFebruary cash salesPayment of March credit purchasesCollection of January credit salesJanuary cash salesCollection of March credit salesPayment of February credit purchasesMarch cash sales		enter a dollar amount
Total collections		$enter a total amount

(b)

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

NIETO COMPANY Expected Payments for Direct Materials
		March
select an item                                                          January cash salesMarch cash purchasesCollection of January credit salesCollection of March credit salesPayment of March credit purchasesMarch cash salesFebruary cash salesPayment of February credit purchasesCollection of February credit sales		$enter a dollar amount
select an item                                                          Collection of January credit salesCollection of February credit salesPayment of March credit purchasesFebruary cash salesMarch cash salesPayment of February credit purchasesMarch cash purchasesCollection of March credit salesJanuary cash sales		enter a dollar amount
select an item                                                          Payment of February credit purchasesCollection of January credit salesJanuary cash salesFebruary cash salesPayment of March credit purchasesCollection of March credit salesMarch cash salesCollection of February credit salesMarch cash purchases		enter a dollar amount
Total payments		$enter a total amount

Answer 1

Statement Showing Budgeted Sales
	January	February	March
Total Sales	$                     2,37,000	$           2,30,100	$              3,29,800
Cash Sales	$                        71,100	$              69,030	$                 98,940
Credit Sales	$                     1,65,900	$           1,61,070	$              2,30,860
Nieto Company
Budgeted Cash Collection from Customers
For the Months of March
	March
Cash Sales	$                        98,940
Collection of Credit Sales
10% of current month Credit Sales(From the monh of March)	$                        23,086
50% of prior month Credit Sales(From the monh of February)	$                        80,535
12% of Credit Sales two months ago(From the monh of January)	$                        59,724
Total Collection of Credit Sales	$                     1,63,345
Total Cash Collections	$                     2,62,285
Statement Showing Budgeted D.M Purchases
	January	February	March
Total Purchase	$                        33,500	$              38,900	$                 38,300
Cash Purchase	$                        16,750	$              19,450	$                 19,150
Credit Purchase	$                        16,750	$              19,450	$                 19,150
Nieto Company
Budgeted Cash Payment
For the Months of March
	March
Cash Purchase	$                        19,150
Collection of Credit Purchase
40% of current month Credit Purchase(From the monh of March)	$                          7,660
60% of current month Credit Purchase(From the monh of February)	$                        11,670
Total Collection of Credit Purchase	$                        19,330
Total Cash Payments	$                        38,480