1. Mr. Ray is concerned about cash flow and has requested that you prepare a Cash Collections Schedule, a Cash Payments Schedule, and a Cash Budget for the first two months of the year using the following information:

   • Cash collections for Ray Cake Shop are 60% of sales in the month of sale, 30% collected in the month after the sale, and 10% collected in the second month after the sale.

   • Ray Cake Shop pays 65% of its purchases of direct materials in the month of sale, and 35% in the month after the purchase.

	November	December	January	February
Cake Sales	$150,000	$145,600	$160,000	$176,000
Purchases	$10,000	$10,600	$11,400	$12,500

• Beginning cash balance was $20,000 and Mr. Rays required minimum balance for the Ray Cake Shop is $15,000.

• Mr. Ray estimates direct labor and manufacturing overhead to be $84,000 for January and $92,400 for February.

• Mr. Ray would like to include in the Cash Budget in January, the purchase of a new industrial oven at a cost of $75,000.

Ray Cake Shop

Cash Collections Schedule

For the Quarter Ended March 31, 2021

Cash Collections:	Sales	January	February	March	Total
November	$150,000
December	145,600
January	160,000
February	176,000
Total Collections

Ray Cake Shop

Cash Payments Schedule

For the Quarter Ended March 31, 2021

Cash Payments:	Purchases	January	February	March	Total
November	$10,000
December	10,600
January	11,400
February	12,500
Total Payments

Ray Cake Shop

Cash Budget

For the Two Months Ended February 28, 2021

	January	February	Total
Beginning Cash Balance
Collections from Customers
Total Available Cash
Disbursements:
Cash Payments
Direct Labor and Manufacturing Overhead
Purchase of oven
Total Disbursements
Excess (deficiency) of Available Cash
Financing:
+ Borrowings
- Repayments
Ending Cash Balance