E9.14 (LO 4), AP Danner Company expects to have a cash balance of $45,000 on January 1, 2022. Relevant monthly budget data for the first 2 months of 2022 are as follows.

Collections from customers: January $85,000, February $150,000.

Payments for direct materials: January $50,000, February $75,000.

Direct labor: January $30,000, February $45,000. Wages are paid in the month they are incurred.

Manufacturing overhead: January $21,000, February $25,000. These costs include depreciation of $1,500 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 $12,000 in cash. Danner 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 $20,000.

Instructions

Prepare a cash budget for January and February.

Prepare a cash budget.