Joplin Company prepares monthly cash budgets. Here are relevant data from operating budgets for 1998 :

All sales are on account. Collections are expected to be \(50 \%\) in the month of sale, \(30 \%\) in the first month following the sale, and \(20 \%\) in the second month following the sale. Forty percent \((40 \%)\) of direct material purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred. Depreciation has been excluded from manufacturing overhead and selling and administrative expenses.
Other data are listed here:
1. Credit sales-November 1997, \(\$ 200,000\); December 1997, \(\$ 280,000\)
2. Purchases of direct materials-December \(1997, \$ 90,000\)
3. Other receipts-January: collection of December 31, 1997, interest receivable \(\$ 3,000\); February: proceeds from sale of securities \(\$ 5,000\)
4. Other disbursements-February: payment of \(\$ 20,000\) for land The company's cash balance on January 1,1998 , is expected to be \(\$ 60,000\). The company wants to maintain a minimum cash balance of \(\$ 50,000\).

\section*{Instructions}

(a) Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases.

(b) Prepare a cash budget for January and February.

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January February Sales $360,000 $400,000 Direct materials purchases 100,000 110,000 Direct labor 80,000 95,000 Manufacturing overhead 60,000 75,000 Selling and administrative expenses 75,000 85,000