Jake Company expects to have a cash balance of $45,000 on January 1, 2017. Relevant monthly budget data for the fi rst 2 months of 2017 are as follows.

Collections from customers: January $100,000. February $160,000.

Payments for direct materials: January $60,000, February $80,000.

Direct labor: January $30,000, February $45,000. Wages are paid in the month they are incurred. Manufacturing overhead: January $26,000, February $31,000. 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. Jake 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 $25,000.

Instructions 

Prepare a cash budget for January and February.