Cash budgeting. On December 1, 2007, the Itami Wholesale Company is attempting to project cash receipts and disbursements through January 31, 2008. On this latter date, a note will be payable in the amount of $120,000. This amount was borrowed in $eptember to carry the company through the seasonal peak in November and December.

The trial balance on December 1 shows in part the following information:

Cash $ 12,000 Accounts receivable 336,000 Allowance for bad debts $ 18,960 Inventory 105,000 Accounts payable 110,400

$ales terms call for a 2% discount if payment is made within the first ten days of the month after purchase; after that, the full amount is due by the end of the month after pur¬

chase. Experience has shown that 70% of the billings will be collected within the discount period, 20% by the end ofthe month after purchase, 8% in the following month, and 2% will be uncollectible. There are no cash sales.

The average selling price of the company’s products is $120 per unit. Actual and projected sales are as follows:

October actual $ 216,000 November actual 300,000 December estimated 360,000 January estimated 180,000 February estimated 144,000 Total estimated for year ended June 30, 2008 1,800,000 All purchases are payable within 15 days. Thus, approximately 50% of the purchases in a month are due and payable in the next month. The average unit purchase cost is $84. Target ending inventories are 500 units plus 25% ofthe next month’s unit sales.

Total budgeted marketing, distribution, and customer service costs for the year are

$480,000. Ofthis amount, $180,000 is considered fixed (and includes amortization of $36,000).

The remainder varies with sales. Both fixed and variable marketing, distribution, and customer service costs are paid as incurred.

Required Prepare a cash budget for December and January, fiupply supporting schedules for collections of receivables, payments for merchandise, and marketing, distribution, and customer service costs. Will there be enough cash available on January 31, 2008 to repay the $120,000 note?