Item$9$

$11\mathrm{.}12$

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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 $$42,000.$

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 $ $505,000$ $ $539,000$ $ $612,000$

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 $$378,000$ for December. Thirty percent of a month$$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.

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

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.

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.