Gollum Corp. prepares monthly cash budgets. Relevant data from operating budgets for 2017 follow: January February Sales $275,000 $425,000 Direct materials purchases 150,000 175,000 Direct labour 75,000 95,000 Manufacturing overhead 90,000 97,000 Selling and administrative expenses 60,000 65,000 All sales are on account. Collections are expected to be: 55% in the month of sale, 35% in the fi rst month following sale, 9% in the second month following the sale. Forty percent 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 are paid in the month incurred, except for selling and administrative expenses, which include $1,000 of depreciation per month. Other data: 1. Credit sales: November 2016, $340,000; December 2016, $375,000 2. Purchases of direct materials: December 2016, $110,000 3. Other receipts: Januarycollection of a note receivable, $5,000 Februaryproceeds from sale of investments, $8,000 4. Other disbursements: Januarypurchase of equipment, $15,000 Februarypayment of dividends, $4,000 5. Th e company's cash balance on January 1, 2017, is expected to be $45,000. Th e company wants to keep a mini- mum cash balance of $40,000. 6. Interest on borrowings is paid when the principal is paid.

Instructions (a) Prepare schedules for (1) the expected cash collections from customers and (2) the expected payments for direct materials purchases.