Question 1:

Arlington Manufacturing needs to prepare a cash budget for December 2019. The cash balance at the beginning of December is $14,000. The actual sales for October and November and expected sales for December are:

Information	October ($)	November ($)	December ($)
Cash Sales	13,000	14,500	22,800
Sales on Account	50,000	60,000	85,000
Total Sales	63,000	74,500	107,800

Sales on account are collected over a three-month period in the following ratio:

15% in the month of sale,

65% in the month following sale

17% in the second month following sale

3% remaining are uncollectible.

Additional information includes:

(a) Purchases of inventory will total $50,000 for December; 15% will be paid for in December. Accounts payable from Novembers inventory purchases is $32,000, all of which will be paid in December.

(b) Selling and administrative expenses are budgeted at $24,000 for December; of which $8,000 is for depreciation.

(c) Equipment costing $35,000 will be purchased for cash during December, and other miscellaneous cash expenses of $5,000 will be paid during December.

Required

Prepare a schedule showing the cash collections from sales on account for the month of December and also a Cash Budget for December. Show all working clearly