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

The cash balance on December 1 is $41,000.

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

	October	November	December
Cash sales	$ 68,400	$ 87,400	$ 95,800
Sales on account	$ 415,000	$ 614,000	$ 692,000

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% are uncollectible.

Purchases of inventory will total $376,000 for December. Thirty percent of a months inventory purchases are paid during the month of purchase. The accounts payable remaining from Novembers inventory purchases total $174,500, all of which will be paid in December.

Selling and administrative expenses are budgeted at $452,000 for December. Of this amount, $63,500 is for depreciation.

A new web server for the Marketing Department costing $86,500 will be purchased for cash during December, and dividends totaling $10,500 will be paid during the month.

The company maintains a minimum cash balance of $20,000. An open line of credit is available from the companys bank to increase its cash balance as needed.

Required:

For December:

1. Calculate the expected cash collections.
2. Calculate the expected cash disbursements for merchandise purchases.
3. 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.