Campagna Company expects to have a cash balance of \($46,000\) on January 1, 2002. Relevant monthly budget data for the first 2 months of 2002 are as follows.

Collections from customers: January \($80,000\), February $150,000.

Payments to suppliers: January \($40,000\), February \($75,000\). Direct labor: January \($30,000\), February \($45,000\). Wages are paid in the month they are incurred.

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. Selling and administrative expenses: January \($15,000\), February \($20,000\). These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize \($10,000\) in cash. Campagna 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.