On December 1, 20142014, the Itali Wholesale Co. is attempting to project cash receipts and disbursements through January 31, 2015. On this later date, a note will be payable in the amount of $109,000. This amount was borrowed in September to carry the company through the seasonal peak in November and December.

Selected general ledger balances on December 1 are as follows:

Cash $91,000

Inventory 132,000

Accounts payable $125,000

Payment against sales made in a particular month are due in the following month. Sales terms call for a 3% discount if payment is made within the first 10 days of the month after sale, with the balance due by the end of the month after sale.

Experience has shown that 50% of the billings will be collected within the discount period,

25% by the end of the month after sales, and 20% in the following month. The remaining 5% will be uncollectible. There are no cash sales.

The average selling price of the company's products is $190 per unit. Actual and projected sales are as follows:

October actual	$289,000
November actual	741,000
December estimated	665,000
January estimated	722,000
February estimated	399,000
Total estimated for year ending June 30, 2015	$2,100,000

All purchases are payable within 15 days. Approximately 60% of the purchases in a month are paid that month and the rest the following month. The average unit purchase cost is

$150.

Target ending inventories are 590 units plus 10% of the next month's unit sales.

Total budgeted marketing, distribution, and customer-service costs for the year are $690,000.

Of this amount, $165,000 are considered fixed (and include depreciation of $51,000).

The remainder varies with sales. Both fixed and variable marketing, distribution, and customer-service costs are paid as incurred

1.

Prepare a cash budget for December 2014 and January2015. Supply supporting schedules for collections of receivables; payments for merchandise; and marketing, distribution, and customer-service costs.

2.

Why do Itali's managers prepare a cash budget in addition to the operating income budget?

Requirement 1. Prepare a cash budget for December

20142014

and January

20152015.

Supply supporting schedules for collections of receivables; payments formerchandise; and marketing, distribution, and customer-service costs.

Begin by entering the appropriate amounts to calculate the collection of receivables for December 2014

and January 2015.

(For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.)

Collections of Receivables
	December 2014	January 2015
From sales in:
October
November
December
January
Total Pleas give detailed explianation as i have been working at this for hours