Strathcona Caterers Limited has the following projected income statement for the first two months of 2012.

Realizing that an income statement does not measure cash flows, Strathcona's manager has asked you to prepare a cash budget for January and February. The company usually pays all of the salaries and other operating costs each month but will only collect cash from customers of $90,000 in January and $120,000 in February. Furthermore, the company's food suppliers allow the company some credit so payments for food and beverage costs in January will be $23,000 and $36,000, respectively. At the beginning of January, the company had $10,000 of cash on hand. The company would like to buy some equipment for $17,000 in January and plans to sell some investments for $10,000 in February.
Instructions
(a) Prepare a cash budget for the company for January and February.
(b) Based on your budget, determine if the company needs to obtain a loan from the bank in January and whether it can repay any of the loan in February.

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Sales Cost of food and beverages sold Salary expense Other operating expenses January $110,000 30,000 25,000 40,000 February $140,000 42,000 36,000 50,000