Orton Company prepares monthly cash budgets. Relevant data from operating budgets for 2011 are:

All sales are on account. Collections are expected to be \(60 \%\) in the month of sale, \(30 \%\) in the first month following the sale, and \(10 \%\) in the second month following the sale. Thirty percent \((30 \%)\) 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. Depreciation has been excluded from manufacturing overhead and selling and administrative expenses.
Other data:
1. Credit sales: November 2010, \(\$ 200,000\); December 2010, \(\$ 280,000\).
2. Purchases of direct materials: December \(2010, \$ 90,000\).
3. Other receipts: January-Collection of December 31, 2010, interest receivable \(\$ 3,000\); February-Proceeds from sale of securities \(\$ 5,000\).
4. Other disbursements: February-payment of \(\$ 20,000\) for land.
The company's cash balance on January 1,2011 , is expected to be \(\$ 60,000\). The company wants to maintain a minimum cash balance of \(\$ 50,000\).
Instructions:

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

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

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January February Sales $320,000 $400,000 Direct materials purchases 80,000 110,000 Direct labor 85,000 115,000 Manufacturing overhead 60,000 75,000 Selling and administrative expenses 75,000 80,000