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Marigold Company’s budgeted sales and direct materials purchases are as follows.Budgeted SalesBudgeted D.M. PurchasesJanuary$220,000$33,000February242,00039,600March275,00041,800Marigold’s sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Marigold’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.Waterway Company expects to have a cash balance of $57,600 on January 1, 2022. Relevant monthly budget data for the first 2 months of 2022 are as follows.Collections from customers: January $108,800, February $192,000.Payments for direct materials: January $64,000, February $96,000.Direct labor: January $38,400, February $57,600. Wages are paid in the month they are incurred.Manufacturing overhead: January $26,880, February $32,000. These costs include depreciation of $1,920 per month. All other overhead costs are paid as incurred.Selling and administrative expenses: January $19,200, February $25,600. These costs are exclusive of depreciation. They are paid as incurred.Sales of marketable securities in January are expected to realize $15,360 in cash. Waterway Company has a line of credit at a local bank that enables it to borrow up to $32,000. The company wants to maintain a minimum monthly cash balance of $25,600.Prepare a cash budget for January and February.
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