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PROBLEM 8-21 Schedules of Expected Cash Collections and Disbursements LOD-2.408-4, LOV-89 You have been asked to prepare a December cah budget for Ashton Company, a distributor of exercise equipment. The following information is wailable about the company's operation: # The cash balance on December 1 is $40,000 B. Actual sales for October and November and expected salen for December are as follows: October November December Cash sales $65,000 $70,000 $83,000 Soles on account $400,000 $525,000 $600,000 N 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% in uncollectible c Purchases of inventory will total $280,000 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 purchasen total $161,000, all of which will be paid in December d. Selling and administrative expenses are budgeted at $430,000 for December of this amount, $50,000 is for depreciation e. A new web server for the Marketing Department conting $76,000 will be purchased for cash during December, and dividends totaling $9,000 will be paid during the month. f. 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: 1. Calculate the expected cash collections for December 2. Calculate the expected cash disbursements for merchandise purchases for December 3. Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month