Waterways Corporation is preparing its budget for the coming year, 2022. The first step is to plan for the first quarter

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Waterways Corporation is preparing its budget for the coming
year, 2022. The first step is to plan for the first quarter of that
coming year. The company has gathered information from its
managers in preparation of the budgeting process.
Waterways likes to keep 10% of the next month’s unit sales in
ending inventory. All sales are on account. 85% of the Accounts
Receivable are collected in the month of sale, and 15% of the
Accounts Receivable are collected in the month after sale. Accounts
receivable on December 31, 2021, totaled $183,600.

Direct Materials

Direct materials cost 80 cents per pound. Two pounds of
direct materials are required to produce each unit.

Waterways likes to keep 5% of the materials needed for the next
month in its ending inventory. Raw Materials on December 31, 2021
totaled 11,370 pounds. Payment for materials is made
within 15 days. 50% is paid in the month of purchase, and 50% is
paid in the month after purchase. Accounts Payable on December 31,
2021, totaled $120,595.
Manufacturing Overhead
Indirect materials
Indirect labor
Utilities
Maintenance
Salaries
Depreciation
Property taxes
Insurance
Maintenance
Selling and Administrative
Variable selling and administrative cost per unit is $1.50.
Advertising
Insurance
Salaries
Depreciation
Other fixed costs
Other Information

The Cash balance on December 31, 2021, totaled $102,000, but
management has decided it would like to maintain a cash balance of
at least $800,000 beginning on January 31, 2022. Dividends are
paid each month at the rate of $2.30 per share
for 4,750 shares outstanding. The company has an open
line of credit with Romney’s Bank. The terms of the agreement
requires borrowing to be in $1,000 increments at 9%
interest. Waterways borrows on the first day of the month and
repays on the last day of the month. A $450,000 equipment
purchase is planned for February.
For the first quarter of 2022, prepare a schedule for expected
cash collections from customers.
Schedule of Expected Collections from
Customers
January
February
March
Quarter
Accounts receivable, 12/31/19
$enter a dollar amount
$enter a dollar amount
January sales
enter a dollar amount
enter a dollar amount
enter a dollar amount
February sales
enter a dollar amount
enter a dollar amount
March sales
Total cash collections