Hudson Company expects to have a cash balance of $43,000 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017.

1. Collections from customers: January $95,000, February $142,000

2. Payments to suppliers: January $40,000, February $50,000

3. Wages: January $34,000, February $40,000. Wages are paid in the month they are incurred.

4. Administrative expenses: January $24,000, February $31,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.

5. Selling expenses: January $15,000, February $20,000. These costs are exclusive of depreciation. They are paid as incurred.

6. Sales of short-term investments in January are expected to realize $12,000 in cash.

Hudson has a line of credit at a local bank that enables it to borrow up to $40,000. The company wants to maintain a minimum monthly cash balance of $25,000.

Instructions

make a cash budget for January and February.