Reference no: EM135455

Sunday Starr prepares monthly cash budgets. Relevant data from Sunday Starr's operating budgets for 2011 are:

                                                            January              February

Sales                                                 $525,000             $600,000

Direct materials purchases                142,500               165,000

Direct Labour                                    120,000                142,500

Manufacturing Overhead                  90,000                  12,500

Selling and administrative expenses 112,500           127,500

Notes:

1. All sales are on account. Credit sales for November 2010 are $300,000; and for December 2010, were $450,000.

2. Collections from accounts receivable are expected to be 60% in the month of sale, and 40% in the second month following sale.

3. Direct materials purchased in December 2010 amounted to $90,000. 40% of the direct materials purchased are paid for in the month of purchase. The balance is paid in the month following purchase.

4. Assume that all other expenses are paid in the month incurred.

5. February 2011, received proceeds from the sale of investments of $5,000.

6. February 2011, paid $20,000 cash for land.

7. Sunday Starr management policy is to maintain a minimum cash balance of $50,000. The cash balance on December 31st 2010 is expected to be $60,000.

8. Depreciation has not been included in the data provided for manufacturing overhead and selling and administrative expenses.

Required:

Prepare Sunday Starr's cash budget for January and February in columnar format.