Problem 22-04A a-b (Video) (Part Level Submission)

Crane Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are as follows.

	January	February
Sales	406800	452000
Direct material purchases	135600	141250
Direct labor	101700	113000
Manufacturing overhead	79100	84750
Selling and administrative expenses	89270	96050

All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) 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 except for selling and administrative expenses that include $1,130 of depreciation per month.

Other data:

1. Credit sales: November 2019, $282,500; December 2019, $361,600.

2. Purchases of direct materials: December 2019, $113,000.

3. Other receipts: JanuaryCollection of December 31, 2019, notes receivable $16,950; FebruaryProceeds from sale of securities $6,780.

4. Other disbursements: FebruaryPayment of $6,780 cash dividend.

The companys cash balance on January 1, 2020, is expected to be $67,800. The company wants to maintain a minimum cash balance of $56,500.

Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February.