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

All sales are on account. Lorch expects collections to be 50% in the the sale, and 10% in the second month following the sale. It pays 30% of direct materials purchases in cash in the month of purchase and the balance due in the month following the purchase.
Other data are as follows:
1. Credit sales: November 2016, $200,000; December 2016, $280,000
2. Purchases of direct materials: December 2016, $90,000
3. Other receipts: January-collection of December 31, 2016, notes receivable $5,000; February-proceeds from sale of securities $6,000
4. Other disbursements: February-payment of $20,000 for land.
The company expects its cash balance on January 1, 2017, to be $50,000. It wants to maintain a minimum cash balance of $40,000.
Instructions
(a) Prepare schedules for (1) the expected collections from customers and (2) the expected payments for direct materials purchases.
(b) Prepare a cash budget for January and February using columns for each month.

Sales Direct materials purchase Direct labour Manufacturing overhead Selling and administrative expenses January $350,000 120,000 85,000 60,000 75,000 February $400,000 110,000 112,000 75,000 80,000