Yaeger Company prepares monthly cash budgets. Relevant data from operating budgets for 2003 are:

All sales are on account. Collections are expected to be 50% in the month of sale, "WA in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) ol direct materials purchases are paid in cash in the month ol purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month inclined except for selling and administrative expenses that include \($1,000\) of depreciation per month.

Other data:
1. Credit sales: November 2002, $260,000; December 2002, $300,000.
2. Purchases of direct materials: December 2002, $100,000.
3. Other receipts: January—Collection of December 3 1 , 2002. notes receivable $15,000;
February—Proceeds from sale ol securities $6,000.
4. Other disbursements: February Withdrawal ol \($5,000\) cash for personal use oi owner, Dewey Yaeger.
The company's cash balance on January 1 , 2003, is expected to be \($70,000\). The company wants to maintain a minimum cash balance of $50,000.

Instructions

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

(b) Prepare a cash budget for January and February in columnar form

Transcribed Image Text:

January February Sales $360,000 $400,000 Direct materials purchases 125,000 130,000 Direct labor 90,000 100,000 Manufacturing overhead 70,000 75,000 Selling and administrative expenses 79,000 86,000