Davidson Manufacturing needs to draw up a cash budget for December 2016. The cash balance at the beginning of December is $9,000. The actual sales for October and November and expected sales for December are:

Information

October ($)

November ($)

December ($)

Cash Sales

13,000

10,500

14,800

Sales on Account

40,000

60,000

80,000

Total Sales

53,000

70,500

98,800

Sales on account are collected over a three-month period in the following ratio:

10% in the month of sale,

70% in the month following sale

18% in the second month following sale

2% remaining are uncollectible.

Additional information includes:

(a) Purchases of inventory will total $ 50,000 for December; 20% will be paid for in December. Accounts payable from November's inventory purchases is $ 32,000, all of which will be paid in December.

(b) Selling and administrative expenses are budgeted at $ 26,000 for December; of which $ 8,000 is for depreciation.

(c) Equipment costing $ 36,000 will be purchased for cash during December, and other miscellaneous cash expenses of $ 6,000 will be paid during December.

Required

Prepare the cash collections for the month of December and also a Cash Budget for December.Show all working clearly