Problem 8-19 Schedules of Expected Cash Collections and Disbursements [LO8-2, LO8-4, LO8-8]

You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company?s operations:

a.The cash balance on December 1 is $51,000.

b.Actual sales for October and November and expected sales for December are as follows:

OctoberNovemberDecember

Cash sales$68,200$81,600$90,600

Sales on account510,000603,000636,000

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% is uncollectible.

c.Purchases of inventory will total $282,000 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 $170,500, all of which will be paid in December.

d.Selling and administrative expenses are budgeted at $471,000 for December. Of this amount, $61,100 is for depreciation.e.A new web server for the Marketing Department costing $118,500 will be purchased for cash during December, and dividends totaling $18,000 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 bolster the cash position as needed.

1. Prepare a schedule bfexpected cash cplecbns for December. Cbledjbns an account: October sales N member saies December sales Tbtal cash cpledjbns 2. Prepare a schedule bfexpected cash disbursements for merchandise purchIII-I for December. Payments to suppiers: _ N member purchase-I _ December purchase-I _ macaw-mum _ 3' Prepare a cash budget for December. Indicate 'n the fnanc'ng section any bbrrbw'ng that wi be needed during the month. Assume that any 'nterest wi not be paid unti the fnlnwhg mnnth. Beg'nn'ng cash balance Add cnlectinns from customers Tbtal cash ayaiabie Less cash disbursements: Payments to suppiers for inventory Being and adm'nistratiye expenses New web server Dividends paid Tbtal cash disbursements Excess [deciency] nfcash avaiabie :wer disbursements F'nanc'ng: Bbrrbwhgs Repayments Interest Tbtal lanc'ng W1m