Martin Company expects to have a cash balance of $$135,000$ on January $1,2017.$ Relevant monthly budget data for the first $2$ months of $2017$ are as follows:

$$ Collections from customers: January $$246,500,$ February $$435,000.$

$$ Payments for direct materials: January $$155,000,$ February $$240,000$

$$ Direct labor: January $$90,000,$ February $$135,000.$ Wages are paid in the month they are incurred.

$$ Manufacturing overhead: January $$63,000,$ February $$75,000.$ These costs include depreciation of $$5,000$ per month. All other overhead costs are paid as incurred.

$$ Selling and administrative expenses: January $$45,000,$ February $$60,000.$ These costs are exclusive of depreciation. They are paid as incurred.

$$ Sales of marketable securities in January are expected to realize $$36,000$ in cash. Martin Company has a line of credit at the local bank that enables it to borrow up to $$75,000.$ The company wants to maintain a minimum monthly cash balance of $$60,000.$

Instructions

$($a$)$ Prepare a cash budget for January and February.

$($b$)$ Martin Company$$s chief financial officer feels that it is important to have data for the entire quarter especially since their financial forecasts indicate some difficult economic periods in the coming year. March information has been budgeted as follows:

$$ Collections from customers: $$375,000$

$$ Payments for direct materials: $$206,000$

$$ Direct labor: Wages paid in March $$116,000$

$$ Manufacturing overhead: $$64,500.$ This includes the monthly depreciation of $$5,000.$

$$ Selling and administrative expenses: $$51,600.$ This cost is exclusive of depre$-$ciation.

$$ Marketable securities of $$50,000$ can be sold if needed for additional cash.

$(1)$ Prepare a cash budget for March assuming that the company does not sell the marketable securities$.$

$(2)$ What is the maximum amount the company can borrow during March? Does this provide the company with an adequate ending cash balance? show your work.

$(3)$ How much does the company need to borrow if the marketable securities are sold? show your work.

$(4)$ Evaluate the status of the company$$s cash budget for March.

$*$Show tables and calculations of each step.