TO Industries prepares monthly cash budgets.The following budget information is available for July and August 2017:

July

August

Sales

$700,000

$800,000

Direct material purchases

220,000

240,000

Direct labor

200,000

230,000

Manufacturing overhead

120,000

150,000

Selling and administrative expenses

150,000

160,000

All sales are credit sales.The company expects to collect 60% from customers in the month of the sale and the remaining 40% in first month following the sale.The company purchases direct materials on account.The company pays for 70% of the purchases in the month of the purchases and the remaining 30% in the first month following the purchase.Direct labor, manufacturing overhead, and selling and administrative expenses are paid in cash in the month incurred.

Additional information:

June 2017 credit sales were $580,000

June 2017 purchases of direct materials were $180,000

The company's cash balance on July 1, 2017 is expected to be $100,000

The company wants to maintain a minimum cash balance of $80,000 and has a line of credit in the amount of 1,000,000 available to borrow if the budgeted cash balance falls below that level

Required

1.Prepare a schedule of cash collections from credit sales for July and August 2017.

2.Prepare a schedule of cash disbursements for direct material purchases for July and August 2017.

3.Prepare a cash budget for July and August 2017 in columnar format.