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: a. The cash balance on December 1 is $57,600 b. Actual sales for October and November and expected sales for December are as follows: Cash sales Sales on account October November December $ 65, 600 $ 74,800 $ 83,200 $ 480,000 $ 602,000 $ 671,000 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 $342,000 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 $202,000, all of which will be paid in December d. Selling and administrative expenses are budgeted at $523,000 for December of this amount. $51,500 is for depreciation e. A new web server for the Marketing Department costing $76,500 will be purchased for cash during December, and dividends totaling $16,500 will be paid during the month 1. 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. Reg 1 and 2 Reg 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 Req3 > 0 For the Month of December Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Payments to suppliers for inventory Selling and administrative expenses New web server Dividends paid Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayments Interest Total financing Ending cash balance 0 0 $ 0 Wheeling Company is a merchandiser that provided a balance sheet as of September 30 as shown below: Wheeling Company Balance Sheet September 30 Assets Cash $ 61,600 Accounts receivable 170,000 Inventory 86,400 Buildings and equipment, net of depreciation 249,000 Total assets $ 566,400 Liabilities and Stockholders' Equity Accounts payable $ 217,900 Common stock 216,000 Retained earnings 132,500 Total liabilities and stockholders' equity $ 566) 400 The company is in the process of preparing a budget for October and has assembled the following data: 1. Sales are budgeted at $640,000 for October and $650,000 for November. Of these sales, 35% will be for cash: the remainder will be credit sales. Forty percent of a month's credit sales are collected in the month the sales are made, and the remaining 60% is collected in the following month. All of the September 30 accounts receivable will be collected in October 2. The budgeted cost of goods sold is always 45% of sales and the ending merchandise inventory is always 30% of the following month's cost of goods sold. 3. All merchandise purchases are on account. Thirty percent of all purchases are paid for in the month of purchase and 70% are paid for in the following month. All of the September 30 accounts payable to suppliers will be paid during October. 4. Selling and administrative expenses for October are budgeted at $96,600, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,490 for the month 1. Using the information provided, calculate or prepare the following: a. The budgeted cash collections for October b. The budgeted merchandise purchases for October c. The budgeted cash disbursements for merchandise purchases for October d. The budgeted net operating income for October e. A budgeted balance sheet at October 31. 2. Assume the following changes to the underlying budgeting assumptions: (1) 50% of a month's credit sales are collected in the month the sales are made and the remaining 50% is collected in the following month, (2) the ending merchandise inventory is always 10% of the following month's cost of goods sold, and (3) 2098 of all purchases are paid for in the month of purchase and 80% are paid for in the following month. Using these new assumptions, calculate or prepare the following: a. The budgeted cash collections for October b. The budgeted merchandise purchases for October c. The budgeted cash disbursements for merchandise purchases for October, d. Net operating income for the month of October. e. A budgeted balance sheet at October 31. Reg 1A Reg 1B Req 1C Req 1D Reg 1 Reg 2A Reg 28 Req 2c Reg 2D Req 2E Prepare the budgeted cash collections for October Budgeted cash collections for October Reg 1A Reg 1B Req 10 Req 10 Reg 1E Reg 2A Req 28 Reg 2c Req 2D Reg 2E Prepare the budgeted merchandise purchases for October. udgeted merchandise purchases for October Reg 1A Reg 1B Reg 10 Req 1D Req 1E Req 2A Reg 2B Reg 20 Reg 2D Reg 2E Prepare the budgeted cash disbursements for merchandise purchases for October. Budgeted cash disbursements for merchandise purchases for October Reg 1A Reg 1B Reg 10 Reg 1D Req 1E Req 2A Reg 2B Req 2c Reg 2D Req 2E repare the budgeted net operating income for October dgeted net operating income for October Prepare a budgeted balance sheet at October 31. Wheeling Company Balance Sheet October 31 Assets $ 0 Total assets Liabilities and Stockholders' Equity $ 0 Total assets Liabilities and Stockholders' Equity Total liabilities and stockholders' equity $ 0 Req 1E Req 2A Reg 2B Reg 20 Reg 2D Req 10 Reg 2E Reg 1A Reg 1B Reg 1C Prepare the budgeted cash collections for October. Assume that 50% of a month's credit sales are collected in the month the sales are made and the remaining 50% is collected in the following month, (2) the ending merchandise inventory is always 10% of the following month's cost of goods sold, and (3) 20% of all purchases are paid for in the month of purchase and 80% are paid for in the following month. Show less Budgeted cash collections for October Reg 1A Reg 1B Reg 10 Reg 1E Reg 2D Req 10 Reg 2 Reg 28 Reg 20 Reg 2 Prepare the budgeted merchandise purchases for October. Assume that 50% of a month's credit sales are collected in the month the sales are made and the remaining 50% is collected in the following month, (2) the ending merchandise inventory is always 10% of the following month's cost of goods sold, and (3) 20% of all purchases are paid for in the month of purchase and 80% are paid for in the following month. Show less Budgeted merchandise purchases for October Reg 1A Req 1B Req 10 Reg 1D Reg 1E Reg 2A Req 28 Req 2c Reg 2 Req 2D Prepare the budgeted cash disbursements for merchandise purchases for October. Assume that 50% of a month's credit sales are collected in the month the sales are made and the remaining 50% is collected in the following month, (2) the ending merchandise inventory is always 10% of the following month's cost of goods sold, and (3) 20% of all purchases are paid for in the month of purchase and 80% are paid for in the following month. Show less Budgeted cash disbursements for merchandise purchases for October Reg 1A Reg 1B Reg 1C Reg 10 Reg 1E Reg 2A Reg 2B Reg 2C Reg 2D Reg 2E Prepare the net operating income for the month of October. Assume that 50% of a month's credit sales are collected in the month the sales are made and the remaining 50% is collected in the following month, (2) the ending merchandise inventory is always 10% of the following month's cost of goods sold, and (3) 20% of all purchases are paid for in the month of purchase and 80% are paid for in the following month. Show less Budgeted net operating income for October Reg 1A Reg 1B Reg 10 Reg 10 Reg 1E Req 2A Reg 28 Req 20 Req 2D Reg 2E Prepare a budgeted balance sheet at October 31. Assume that 50% of a month's credit sales are collected in the month the sales are made and the remaining 50% is collected in the following month, (2) the ending merchandise inventory is always 10% of the following month's cost of goods sold, and (3) 20% of all purchases are paid for in the month of purchase and 80% are paid for in the following month. Show less Wheeling Company Balance Sheet October 31 Assets Total assets $ 0 Liabilities and Stockholders' Equity Total liabilities and stockholders' equity $ 0