Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

Saved murphy.. Help Save & Exit Submit 4 Check my work You have been asked to prepare a December cash budget for Ashton Company, a

image text in transcribed
Saved murphy.. Help Save & Exit Submit 4 Check my work 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: Ints a. The cash balance on December 1 is $47,600. b. Actual sales for October and November and expected sales for December are as follows: eBook Cash sales October November December Sales on account $ 78, 800 $ 74, 400 $ 89, 600 $ 405, 000 $ 615, 000 $ 628, 000 Print 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. References c. Purchases of inventory will total $351,000 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 $194,500, all of which will be paid in December. d. Selling and administrative expenses are budgeted at $512,000 for December. Of this amount, $81,400 is for depreciation. e. A new web server for the Marketing Department costing $104,000 will be purchased for cash during December, and dividends totaling $11,500 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 increase its cash balance as needed Required: 1. Calculate the expected cash collections for December. 2. Calculate the expected cash disbursements for merchandise purchases for December. 3. Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 1. Calculate the expected cash collections for December. 2. Calculate the expected cash disbursements for merchandise purchases for December. Total cash collections Cash disbursements for merchandise purchases Req 3 > 4 of 5

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Engineering Economy

Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

15th edition

978-0132554909

More Books

Students also viewed these Accounting questions

Question

What is one of the skills required for independent learning?Explain

Answered: 1 week ago