LRF 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
|
35,000
|
|
March
|
270,000
|
41,000
|
LRF's sales are 40% cash and 60% 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. LRF'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.