Derby Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are:

All sales are on account. Collections are expected to be 60% in the month of sale, 25% in the first month following the sale, and 15% in the second month following the sale. Thirty percent (30%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred. Depreciation has been excluded from manufacturing overhead and selling and administrative expenses.

Other data:

1. Credit sales: November 2016, $200,000; December 2016, $290,000.
2. Purchases of direct materials: December 2016, $90,000.
3. Other receipts: January collection of December 31, 2016, interest receivable $3,000; February-proceeds from sale of securities $5,000.
4. Other disbursements: February- payment of $20,000 for land.

The company's cash balance on January 1, 2017, is expected to be $50,000. The company wants to maintain a minimum cash balance of $40,000.

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Instructions

1. Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases.
2. Prepare a cash budget for January and February in columnar form.

P24-4B Derby Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are: All sales are on account. Collections are expected to be 60% in the month of sale, 25% in the first month following the sale, and 15% in the second month following the sale. Thirty percent (30%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred. Depreciation has been excluded from manufacturing overhead and selling and administrative expenses. Other data: 1. Credit sales: November 2016, $200,000; December 2016,$290,000. 2. Purchases of direct materials: December 2016, $90,000. 3. Other receipts: January-collection of December 31 , 2016, interest receivable $3,000; February-proceeds from sale of securities $5,000. 4. Other disbursements: February-payment of $20,000 for land. The company's cash balance on January 1, 2017, is expected to be $50,000. The company wants to maintain a minimum cash balance of $40,000. Instructions (a) Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases. (b) Prepare a cash budget for January and February in columnar form