Hayes Company Assumptions
1. The January 1, 2011, cash balance is expected to be $38,000. Hayes wishes to maintain a balance of at least $15,000.
2. Sales (Illustration 9 3): 60% are collected in the quarter sold and 40% are collected in the following quarter. Accounts receivable of $60,000 at December 31, 2010, are expected to be collected in full in the first quarter of 2011.
3. Short term investments are expected to be sold for $2,000 cash in the first quarter.
4. Direct materials (Illustration 9 7): 50% are paid in the quarter purchased and 50% are paid in the following quarter. Accounts payable of $10,600 at December 31, 2010, are expected to be paid in full in the first quarter of 2011.
5. Direct labor (Illustration 9 9): 100% is paid in the quarter incurred.
6. Manufacturing overhead (Illustration 9 10) and selling and administrative expenses (Illustration 9 11): All items except depreciation are paid in the quarter incurred.
7. Management plans to purchase a truck in the second quarter for $10,000 cash.
8. Hayes makes equal quarterly payments of its estimated annual income taxes.
9. Loans are repaid in the earliest quarter in which there is sufficient cash (that is, when the cash on hand exceeds the $15,000 minimum required balance).
Prepare a schedule of collections from customers.
Prepare a schedule of cash payments for direct materials.