Question

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

		Budgeted Sales		Budgeted D.M. Purchases
January		$256,500		$32,700
February		277,200		37,500
March		297,900		51,500

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. (Round answers to 0 decimal places, e.g. 2,500.)

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

(b)

Prepare a schedule of expected payments for direct materials for March. (Round answers to 0 decimal places, e.g. 2,500.)

NIETO COMPANY Expected Payments for Direct Materials
		March
select payments                                                          Collection of January credit salesPayment of February credit purchasesPayment of March credit purchasesMarch cash purchasesJanuary cash salesCollection of February credit salesMarch cash salesCollection of March credit salesFebruary cash sales		$enter a dollar amount
select payments                                                          March cash purchasesPayment of March credit purchasesPayment of February credit purchasesJanuary cash salesCollection of March credit salesCollection of February credit salesCollection of January credit salesFebruary cash salesMarch cash sales		enter a dollar amount
select payments                                                          January cash salesPayment of March credit purchasesCollection of January credit salesMarch cash salesMarch cash purchasesPayment of February credit purchasesCollection of February credit salesFebruary cash salesCollection of March credit sales		enter a dollar amount
Total payments		$enter a total amount for this column

Answer 1

Value as per Question....

	Budgeted Sales	Budgeted D.M. Purchases
January	$       256,500	$                 32,700
February	$       277,200	$                 37,500
March	$       297,900	$                 51,500

1.

Cash Collection	March
Cash sales collection	$    89,370
Credit Sales Collection	$ 182,511
Total Cash Collection	$ 271,881

Working Note
		January	February	March
Cash sales	30%	$                 76,950	$                 83,160	$                 89,370
Credit Sales	70%	$              179,550	$              194,040	$              208,530
total Sales		$              256,500	$              277,200	$              297,900
		January	February	March
Credit Sales		$              179,550	$              194,040	$              208,530
10% in the month of sale	A	$                 17,955	$                 19,404	$                 20,853
		(179550 x 10%)	(194040 x 10%)	(208530 x 10%)
50% in the month following sale	B		$                 89,775	$                 97,020
			(179550 x 50%)	(194040 x 50%)
36% in the second month following sale	C			$                 64,638
				(179550 x 36%)
4% are uncollectible (BED-DEBT)		$                   7,182	$                   7,762	$                   8,341
Cash collections	A+B+C	$                 17,955	$              109,179	$              182,511

2.

expected payments for direct materials	March
Cash D.M. Purchases	$    25,750
Credit D.M. Purchases	$    21,550
Total expected payments	$    47,300

Working Note
		January	February	March
Cash purchase	50%	$              16,350	$              18,750	$              25,750
Credit purhcase	50%	$              16,350	$              18,750	$              25,750
total purchase		$              32,700	$              37,500	$              51,500
		January	February	March
Credit purhcase		$              16,350	$              18,750	$              25,750
40% in the month of purchase	A	$                 6,540	$                 7,500	$              10,300
		(16350 x 40%)	(18750 x 40%)	(25750 x 40%)
60% in the month following purchase	B		$                 9,810	$              11,250
			(16350 x 60%)	(18750 x 60%)
Cash payment	A+B	$                 6,540	$              17,310	$              21,550