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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:

a. The cash balance on December 1 is $43,200.
b. Actual sales for October and November and expected sales for December are as follows:

October November December
Cash sales $ 76,200 $ 70,800 $ 84,400
Sales on account 520,000 527,000 649,000

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 $370,000 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 $193,000, all of which will be paid in December.

d. Selling and administrative expenses are budgeted at $433,000 for December. Of this amount, $99,800 is for depreciation.
e. A new web server for the Marketing Department costing $78,500 will be purchased for cash during December, and dividends totaling $18,500 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 companys bank to bolster the cash position as needed.

Required:
1. Prepare a schedule of expected cash collections for December.

2.

Prepare a schedule of 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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