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You have been asked to prepare 10 points a December cash budget for Picasso Company, a distributor of exercise equipment. The following information is available
You have been asked to prepare 10 points a December cash budget for Picasso Company, a distributor of exercise equipment. The following information is available about the company's operations: - the cash balance on December 1854,000 ) Actual sales for October and November and tapected sales for December areas follows Particulars October November December Cash sales $85.000 $80,000 $9,000 Sales on account 5500,000 5515,000 5630,000 Sales on account are collected over a three month period as follows: 25 collected in the month of sale, 55 collected in the month following sales and 39% collected in the second month following sale. The remaining is collectible d) Purchases of inventory will total $270,000 for December. Thirty-three percent of a month's inventory purchases are paid during the month of purchase. The accounts payable remaining from November's inventory archases total $151,000, all of which will be paid in December e) Selling and administrative expenses are budgeted $440,000 for December of this amount, 560,000 is for depreciation A new web server for the Marketing Desartment costing 577,000 will be purchased for cash during December, and dividends totaling $8,000 will be paid during the month The company maintains a minimum chce of $25,000. An open line of creditis available from the company's bank to bolster the cash position as needed Required: *) Prepare a schedule of expected cash collections for December. marks b) Prepare a schedule of expected cash disbursements for merchandise purchases for December (2 marks] Prepare a cash budget for December indicate in the financing section any borrowing that will be needed during the month. Asume that any interest will not be paid until the following month is marks) Your answer R + z
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