Reference no: EM132998968

Question - Blue Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows:

January February

Sales $390,960 $434,400

Direct materials purchases 130,320 135,750

Direct labor 97,740 108,600

Manufacturing overhead 76,020 81,450

Selling and administrative expenses 85,794 92,310

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. Sixty percent (60%) of direct materials 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 except for selling and administrative expenses that include $1,086 of depreciation per month.

Other data:

1. Credit sales: November 2016, $271,500; December 2016, $347,520.

2. Purchases of direct materials: December 2016, $108,600.

3. Other receipts: January-Collection of December 31, 2016, notes receivable $16,290; February-Proceeds from sale of securities $6,516.

4. Other disbursements: February-Payment of $6,516 cash dividend.

The company's cash balance on January 1, 2017, is expected to be $65,160. The company wants to maintain a minimum cash balance of $54,300.

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