The Demonstration Problem below includes an Action Plan and electronic Working Papers (in Excel). Download the Working Papers and complete the problem, using the Action Plan (be sure to save your work). Once you've completed the problem, you can compare it to the Solution to the Demonstration Problem, also available below (as an Adobe Acrobat file).

Joplin Company prepares monthly cash budgets. Relevant data from operating budgets for 2002 are:

	January	February
Sales	$360,000	$400,000
Direct Materials Purchases	100,000	110,000
Direct Labor	80,000	95,000
Manufacturing Overhead	60,000	75,000
Selling & Admin. Expense	75,000	85,000

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. Forty percent (40%) of direct material 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. Depreciation has been excluded from manufacturing overhead and selling and administrative expenses.

Other data:

• Credit Sales-November 2001, $200,000; December 2001, $280,000.
• Purchases of direct Materials-December 2001, $90,000.
• Other Receipts-January: collection of December 31, 2002, interest receivable $3,000; February: proceeds from sale of securities, $5,000.
• Other Disbursements-February: payment of $20,000 for land.

The company's cash balance on January 1, 2002 is expected to be $60,000. The company wants to maintain a minimum cash balance of $50,000.

Requirement

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

Prepare a cash budget for January and February in columnar form.