Bessner Ltd. prepares a monthly cash budget. Here is expected income statement data for the next two months, January and February of 2022:

Jan Feb

Sales $500,000 $580,000

Direct Materials Purchases 180,000 220,000

Direct Labour 85,000 105,000

Manufacturing Costs* 72,000 79,000

Selling and Admin Exp. 75,000 80,000

*Includes $8,000 Depreciation Expense in EACH month.

All sales are on credit. Collections of sales are estimated to be 40% in the month of sale, and the balance in the month following the sale. Direct material purchases are paid as follows: 55% in the month of sale, and the balance in the month after the sale. All other costs requiring payment are paid in the month of sale.

Sales in November, 2021: $400,000; for December, 2021: $510,000.

Direct materials purchases in November, 2021: $120,000; for December, 2021: $152,000 :.

Other incoming cash: January, interest receivable, $4,000; February, proceeds from sale of securities, $2,000.

Other outgoing cash: January only, payment of cash for land, $36,000.

Cash balance is expected to be $35,000 as of Jan 1, 2022. The companys policy is to always start each month with at least $30,000 in cash. If it is not there at month end, the company will borrow enough so that this policy can be followed.

REQUIRED: a. What does the company expect as their Net Income for January and February of 2022? (3 marks)

\Now, please prepare a cash budget for Bessner Ltd., for January and February, 2022. Use the template given below. Note that just because spaces have been provided for answers, you do not have to use all of them. (22 marks)

Bessner Ltd. Cash Budget for January and February, 2022

Jan Feb

Opening balance $ 35,000 ________

Cash from Nov. 2021 sales ________ ________

Cash from Dec. 2021 sales ________ ________

Cash from Jan 2022 sales ________ ________

Cash from Feb 2022 sales ________ ________

Materials purchases from Nov., 2021 ________ ________

Materials purchases from Dec., 2021 ________ ________

Materials purchases from Jan., 2022 ________ ________

Materials purchases from Feb., 2022 ________ ________

Direct Labour _____ ___ ________

Manufacturing Costs ________ ________

Selling and admin costs ________ ________

Other cash Inflows ________ ________

Other cash outflows ________ ________

Financing (if needed) ________ ________

Closing Balance ________ ________