Ashton Company, a distributor of exercise equipment, is preparing a cash budget for December. It provided the following information:

a$.$ The cash balance on December $1$ is $$42,000.$

b$.$ Actual sales for October and November and expected sales for December are as follows:

October November December

Cash sales $ $80,600$ $ $75,800$ $ $100,200$

Sales on account $ $505,000$ $ $539,000$ $ $612,000$

c$.$

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 $2\%$ are uncollectible.

d$.$ Purchases of inventory will total $$378,000$ for December. Thirty percent of a month$$s inventory purchases are paid during the month of purchase. The accounts payable remaining from November$$s inventory purchases total $$208,000,$ all of which will be paid in December.

e$.$ Selling and administrative expenses are budgeted at $$511,000$ for December. Of this amount, $$70,500$ is for depreciation.

f$.$ A new web server for the Marketing Department costing $$99,500$ will be purchased for cash during December, and dividends totaling $$11,500$ will be paid during the month.

g$.$ 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.

Required:

For December:

$$ Calculate the expected cash collections.

$$ Calculate the expected cash disbursements for merchandise purchases.

$$ Prepare a cash budget. Indicate in the financing section any borrowing needed during the month. Assume any interest will not be paid until the following month.

Calculate the expected cash collections for December.

$2.$ Calculate the expected cash disbursements for merchandise purchases for December.

Total cash collections

Cash disbursements for merchandise purchases

Prepare a cash budget for December. Indicate in the financing section any borrowing needed during the month. Assume any interest will not be paid until the following month

Ashton Company

Cash Budget

For the Month of December

Beginning cash balance

Add collections from customers

Total cash available

Less cash disbursements:

Payments to suppliers for inventory

Selling and administrative expenses

New web server

Dividends paid

Total cash disbursements

Excess $($deficiency$)$ of cash available over disbursements

Financing:

Borrowings

Repayments

Interest

Total financing

Ending cash balance