As the manager of Vaughn Inc., one of your responsibilities is to prepare the cash budget. You were recently given the following information to prepare the December cash budget for Vaughn. The following information is available about the company's operations: 1. The cash balance on December 1 is $40,000. 2. Actual sales for October and November and expected sales for December are as follows:

Cash sales Oct. Nov. Dec. 70,000 75,000 87,000 Sales on Account

Oct. Nov. Dec. 385,000. 532,000. 610,000 Sales on account are collected over a three-month period as follows: 25% collected in the month of sale, 65% collected in the month following sale, and 10% collected in the second month following sale. a. Purchases of inventory will total $250,000 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 $175,000, which will be paid in December. b. Selling and administrative expenses are budgeted at $410,000 for December. Of this amount, $60,000 is for depreciation. c. A new Web server for the Marketing Department costing $80,000 will be purchased for cash during December, and dividends totaling $15,000 will be paid during the month. d. The company maintains a minimum cash balance of $20,000. An open line of credit is available from the company's bank to bolster the cash position as needed. However, amounts borrowed are required to be in increments of $1,000.

Required:

1. Prepare a schedule of expected cash collections for December. 2. Prepare a schedule of expected cash disbursements for merchandise purchases for December. 3. Prepare a cash budget for December. Indicate any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.