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 companys operations The cash balance on December 1 is $50,800 Actual sales for October and November and expected sales for December are as follows October November December Cash sales $ 77,800 $ 83,400 $ 99,800 Sales on account $ 475,000 $ 558,000 $ 622,000 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 Purchases of inventory will total $375,000 for December Thirty percent of a months inventory purchases are paid during the month of purchase The accounts payable remaining from Novembers inventory purchases total $206,500, all of which will be paid in December Selling and administrative expenses are budgeted at $448,000 for December Of this amount, $97,200 is for depreciation A new web server for the Marketing Department costing $80,000 will be purchased for cash during December, and dividends totaling $14,500 will be paid during the month The company maintains a minimum cash balance of $20,000 An open line of credit is available from the companys 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

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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

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 companys operations:

The cash balance on December 1 is $50,800.
Actual sales for October and November and expected sales for December are as follows:

	October		November		December
Cash sales	$	77,800	$	83,400	$	99,800
Sales on account	$	475,000	$	558,000	$	622,000

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.

Purchases of inventory will total $375,000 for December. Thirty percent of a months inventory purchases are paid during the month of purchase. The accounts payable remaining from Novembers inventory purchases total $206,500, all of which will be paid in December.
Selling and administrative expenses are budgeted at $448,000 for December. Of this amount, $97,200 is for depreciation.
A new web server for the Marketing Department costing $80,000 will be purchased for cash during December, and dividends totaling $14,500 will be paid during the month.
The company maintains a minimum cash balance of $20,000. An open line of credit is available from the companys 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.