You have been asked to prepare a December cash budget for Ashton Company, a distributor of...
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You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company's operations: a. The cash balance on December 1 is $51,000. b. Actual sales for October and November and expected sales for December are as follows: Cash sales Sales on account October $ 68,200 $ 510,000 November $ 81,600 $ 603,000 December $ 90,600 $ 636,000 Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible. c. Purchases of inventory will total $282,000 for December. Thirty percent of a month's inventory purchases are paid during the month of purchase. The accounts payable remaining from November's inventory purchases total $170,500, all of which will be paid in December. d. Selling and administrative expenses are budgeted at $471,000 for December. Of this amount, $61,100 is for depreciation. e. A new web server for the Marketing Department costing $118,500 will be purchased for cash during December, and dividends totaling $18,000 will be paid during the month. f. The company maintains a minimum cash balance of $20,000. An open line of credit is available from the company's bank to increase its cash balance as needed. You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company's operations: a. The cash balance on December 1 is $51,000. b. Actual sales for October and November and expected sales for December are as follows: Cash sales Sales on account October $ 68,200 $ 510,000 November $ 81,600 $ 603,000 December $ 90,600 $ 636,000 Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible. c. Purchases of inventory will total $282,000 for December. Thirty percent of a month's inventory purchases are paid during the month of purchase. The accounts payable remaining from November's inventory purchases total $170,500, all of which will be paid in December. d. Selling and administrative expenses are budgeted at $471,000 for December. Of this amount, $61,100 is for depreciation. e. A new web server for the Marketing Department costing $118,500 will be purchased for cash during December, and dividends totaling $18,000 will be paid during the month. f. The company maintains a minimum cash balance of $20,000. An open line of credit is available from the company's bank to increase its cash balance as needed.
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Answer To prepare the December cash budget for Ashton Company we need to consider the cash receipts ... View the full answer
Related Book For
Managerial Accounting
ISBN: 9781259275814
11th Canadian Edition
Authors: Ray H Garrison, Alan Webb, Theresa Libby
Posted Date:
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