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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 company's operations: a. The cash balance on December 1 is $56,600 b. Actual sales for October and November and expected sales for December are as follows: October November December Sales on account 5 440,00 5 575.400 8306,00 Cash sales $ 440,000 576,000 639,000 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 $315,000 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 $181,500, all of which will be paid in December d. Selling and administrative expenses are budgeted at $522,000 for December. Of this amount, $74,100 is for depreciation e. A new web server for the Marketing Department costing $103,500 will be purchased for cash during December, and dividends totaling $10,000 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
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