Pharoah Company expects to have a cash balance of $101,200 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2022. 1. Collections from customers: January $156,200, February $321,200.
2. Payments to suppliers: January $88,000, February $165,000.
3. Wages: January $66,000, February $88,000. Wages are paid in the month they are incurred.
4. Administrative expenses: January $46,200, February $52,800. These costs include depreciation of $2,200 per month. All other costs are paid as incurred.
5. Selling expenses: January $33,000, February $44,000. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $26,400 in cash. Pharoah Company has a line of credit at a local bank that enables it to borrow up to $55,000. The company wants to maintain a minimum monthly cash balance of $44,000.
Prepare a cash budget for January and February.