Hanover Company expects to have a cash balance of $46,000 on January 1, 2001.

These are the relevant monthly budget data for the first 2 months of 2001:

1. Collections from customers: January $70,000; February $155,000.

2. Payments to suppliers: January $40,000; February $75,000.

3. Direct labor: January $30,000; February $40,000. Wages are paid in the month they are incurred.

4. Manufacturing overhead: January $21,000; February $30,000. These costs include depreciation of $1,000 per month. All other overhead costs are paid as incurred.

5. Selling and administrative expenses: January $14,000; February $18,000. These costs are exclusive of depreciation. They are paid as incurred.

6. Sales of marketable securities in January are expected to realize $7,000 in cash. Hanover Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of

$20,000.

Instructions Prepare a cash budget for January and February.