Brett's Restaurant Supply is preparing its cash budgets for the first two months of the upcoming year. Here is the information about the company's upcoming cash receipts and cash disbursements:

1. Prepare schedules of (a) budgeted cash collections, (b) budgeted cash payments for purchases, and (c) budgeted cash payments for operating expenses. Show totals for each month and totals for January and February combined.

2. Prepare a combined cash budget for January and February. If no financing activity takes place, what is the budgeted cash balance on February 28?

a. Sales are 75% cash and 25% credit. Credit sales are collected 30% in the month of sale and the remainder in the month after sale. Actual sales in December were $52,000. Schedules of budgeted sales for the two months of the upcoming year are as follows: Budgeted Sales Revenue January ................ $62,000 February ........ $68,000 b. Actual purchases of direct materials in December were $25,000. The company's purchases of direct materials in January are budgeted to be $22,000 and $27,000 in February. All purchases are paid 40% in the month of purchase and 60% the following month. c. Salaries and sales commissions are also paid half in the month earned and half the next month. Actual salaries were $8,500 in December. Budgeted salaries in January are $9,500 and February budgeted salaries are $11,000. Sales commissions each month are 12% of that month's sales. d. Rent expense is $3,200 per month. e. Depreciation is $2,700 per month. f. Estimated income tax payments are made at the end of January. The estimated tax payment is projected to be $14,000. g. The cash balance at the end of the prior year was $21,000. Requirement 1a. Prepare a schedule of budgeted cash collections for January and February. Show totals for each month and totals for January and February combined. Brett's Restaurant Supply Cash Collections Budget For the Months Ended January 31 and February 28 January February Cash sales $ 46,500 $ 51,000 $ 13,750 15,950 Collection on credit sales 60,250 $ 66,950 $ Total cash collections Total 97,500 29,700 127,200 b. Prepare a schedule of budgeted cash payments for purchases for January and February. Show totals for each month and totals for January and February combined. Brett's Restaurant Supply Cash Payments for Material Purchases Budget For the Months Ended January 31 and February 28 January February 40% of current month DM purchases 8,800 $ 10,800 $ 60% of last month's DM purchases 15,000 13,200 23,800 $ 24,000 $ Total cash payments Total 19,600 28,200 47,800 c. Prepare a schedule of budgeted cash payments for operating expenses for January and February. Show totals for each month and totals for January and February combined. (If a box is not used in the table leave the box empty; do not enter a zero. Round all amounts to the nearest dollar.) Total 3,120 7,440 4,080 Brett Restaurant Supply Cash Payments for Operating Expenses Budget For the Months Ended January 31 and February 28 January February Variable cash operating expenses: Sales commissions: December 3,120 $ Sales commissions: January 3,720 $ 3,720 4,080 Sales commissions: February Total variable cash operating expenses 6,840 7,800 Fixed cash operating expenses: Sales salaries: December 4,250 Sales salaries: January 4,750 4,750 Sales salaries: February 5,500 Rent expense 3,200 3,200 Tax expense 14,000 Total fixed cash operating expenses 26,200 13,450 33,040 $ 21,250 $ Total cash payments for operating expenses 14,640 4,250 9,500 5,500 6,400 14,000 39,650 54,290 Requirement 2. Prepare a combined cash budget for January and February. If no financing activity takes place, what is the budgeted cash balance on February 28? Brett's Restaurant Supply Combined Cash Budget For the Months Ended January 31 and February 28 January February 2 months Beginning cash balance Plus: Cash collections from customers Total cash available Less cash payments: Direct materials purchases Operating expenses Total cash payments Ending cash balance