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Problem 10-38A

Lorch Company prepares monthly cash budgets. Relevant data from operating budgets for 2013 are as follows:

		January		February
Sales		$352,300		$397,300
Direct materials purchases		119,100		108,400
Direct labour		84,720		112,160
Manufacturing overhead		59,330		75,010
Selling and administrative expenses		75,380		79,550

All sales are on account. Lorch expects collections to be 50% in the month of sale, 40% in the first month following 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. It pays all other items above in the month incurred, except depreciation expenses. Other data are as follows:

1.	Credit sales: November 2012, $208,500; December 2012, $281,000
2.	Purchases of direct materials: December 2012, $88,650
3.	Other receipts: Januarycollection of December 31, 2012, notes receivable $5,310; Februaryproceeds from sale of securities $5,040
4.	Other disbursements: Februarypayment of $20,860 for land.

The company expects its cash balance on January 1, 2013, to be $50,000. It wants to maintain a minimum cash balance of $40,000.

Problem 10-38A Lorch Company prepares monthly cash budgets, Relevant data from operating budgets for 2013 are as follows: ets for Sales Direct materials purchases Direct labour $352,300 $397,300 19,100 108,400 34,720 112,160 9,330 75,380 Selling and administrative expenses 79,55 0 All sales are on account. Lorch expects collections to be 50% n he month of sale, 40% in he first month following the sale, and 10% in he second month the month following the purchase. It pays all other ltems above in the month incurred, except depreciation expenses. lo ng the sale. It pays 30% of direct materials purchases in cash the month of purchase and the balance due in except depreniaioh Other data are as follows: 1. Credit sales: Navember 2012, $208,500; Dacember 2012, $281,0D 2. Purchases of direct materials: December 2012, $93,650 3. Other receipts: January-collection of December 31, 2012, notes receivable $5,310; February-proceeds from sale of securities $5,040 4. Other disbursements: February-payment of $20,860 for land. The company expects its cash balance on January 1, 2013, to be $50,000. It wants to maintain a minimum cash balance of $40,000. Prepare a cash budget for January and February using columns for each month. LORCH COMPANY Cash Budget For the Two Months Ending February 28, 2013 Jan Feb Total Add: Less