Question 9
The Hothi Company prepares monthly cash budgets. Relevant data from operating budgets for 2023 are as follows:
					January	February
Sales					$ 350,000	$ 400,000
Direct materials purchases					120,000	110,000
Selling and administrative expenses					220,000	267,000
Cash balances:
The Hothi Company expects its cash balance on January 1, 2023, to be $50,000. It wants to maintain a cash balance of $40,000 by using its line of credit (ignore calculation and repayments of interest).
Cash receipts:
All sales are on account. The company expects collections to be 50% in the month of sale, 40% in the first month following the sale, and 10% in the second month following the sale. Credit sales: November 2022, $200,000; December 2022, $280,000
Cash disbursements:
It pays 30% of direct materials purchases in cash in the month of purchase and the balance due in the month following the purchase. Purchase of direct materials: December 2022, $90,000
Other data are as follows:
1. Other receipts: January collection of December 31, 2022, notes receivable $5,000; February proceeds from sale of securities $6,000.
2. Other disbursements: February - payment of $20,000 for land.
Required -
Prepare a cash budget for the months of January, Feburary and Total for 2023.
Hothi Company
Cash Budget
For the months ended January and February 2023
					January	February	Total