Sunland Company prepares monthly cash budgets. Relevant data from operating budgets for $2023$ are as follows:

January February

Sales

$$356,000$ $$397,000$

Direct materials purchases

$121,000$

$111,000$

Direct labour

$86,000113,000$

Manufacturing overhead

$61,000$

$76,000$

Selling and administrative expenses

$74,000$

$79,000$

All sales are on account. Sunland 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. It pays $30\%$ of direct materials purchases in cash in the month of purchase and the balance due in the month following the purchase.

Other data are as follows:

$1.$ Credit sales: November $2022,$ $$202,000$; December $2022,$ $$277,000$

$2.$ Purchases of direct materials: December $2022,$ $$89,000$

$3.$ Other receipts: January$-$collection of December $31,2022,$ notes receivable $$5,000$; February$-$proceeds from sale of securities $$6,000$

$4.$ Other disbursements: February$-$payment of $$20,000$ for land

The company expects its cash balance on January $1,2023,$ to be $$50,000.$ It wants to maintain a minimum cash balance of $$40,000.$

Your answer is partially correct.

Prepare schedules for

$(1)$ the expected collections from customers. $(2)$ the expected payments for direct materials purchases.

Also Prepare a cash budget for January and February using columns for each month.

LORCH COMPANY

Cash Budget

For the Two Months Ending February $28,2023$