On December 1,2014,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 107,000.

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

$30,000

Inventory

111,800

Accounts payable

$139,000

Sales terms call for a 3% discount if payment is made within the first 10 days after the 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 in the month of the purchase, 30% by the end of the month after purchase, and 15% 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

$170

per unit. Actual and projected sales are as follows:

October actual	$287,000
November actual	629,000
December estimated	561,000
January estimated	612,000
February estimated	510,000
Total estimated for year ending June 30, 2015	$3,218,750

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 $130.Target ending inventories are 570 units plus 20%of the next month's unit sales.

Total budgeted marketing, distribution, and customer-service costs for the year are $670,000. Of this amount, $155,000 are considered fixed (and include depreciation of $43,400).

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

.	Prepare a cash budget for December 2014 and January 2015. 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 December2014

and January 2015.

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

Begin by entering the appropriate amounts to calculate the collection of receviables for December2014

and January2015.

(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		$0
November
December
January
Total collections