Reference no: EM132957361

Mercury Company prepared the following information for the next three months:

Month           Budgeted Sales

December          $320,000

January          460,000

February            412,000

Direct Materials          Purchases per Month

December                     $ 175,000

January                        185,000

February                       210,000

Direct Labour per Month

January $70,000

February 85,000

Additional Information:

Sales are collected as follows:

• 75% in the month of sale
• 25% in the month after sale

Direct materials purchases are paid as follows:

• 60% in month of purchase
• Remainder paid in full the following month

Other Disbursements:

January - Equipment purchase: $10,000

February - Debt repayment: $30,000

Required:

Problem a) Calculate the cash disbursements (payments) for January.

Problem b) Calculate the cash receipts for February.