you have been asked to prepare a December cash budget for Ashton Company, distributor of exercise equipment. The following information is available about the companys operations
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 $55.400. b. Actual I sales for October and November and expected sales for December are as follows: Cash sales Sales on account october November December 69,400 $ 88,400 $ 96,880 $445,eee $596,eee $625,ee0 Sales on account are collected over a three-month period as follows: 20% collected in the month of sale 60% col ected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible. c. Purch ases of inventory will total $340,000 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 $173,500, all of which will be pai in December d. Selling and administrative expenses are budgeted at $510.000 for December. Of this amount, $55,100 is for depreciation. e. A new web server for the Marketing Department costing $83,000 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 avalilable from the company's bank to increase its cash balance as needed Required 1. Calculate the expected cash coll 2. Calculate the expected cash disbursements for merchandise purchases for December. 3. Prepare a cash budget that any interest will not be paid until the following month. ns for December for December. Indicate in the financing section any borrowing that will be needed during the month. 1 of 8E Next > d. Selling and administrative expenses are budgeted at $510,000 for December. Of this amount. $55,100 is for depreciation e. A new web server for the Marketing Department costing $83,000 will be purchased for cash during December, and divic 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 company's bank 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. 3Preh budget for December. Indicate in the financing section any borrowing that will be needed during the mont that any interest will not be paid until the following month. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 1. Calculate the expected cash coll 2. Calculate the expected cash disbursements for merchandise purchases for December. ns for December. Total cash collections Req 3 > Req 1 and 2 Req 3 Prepare a cash budget for December. Indlcate 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. Ashton Company Cash Budget For the Month of Add Total cash a ble cash disbursements Pa to s expenses nds paid Ending cash bala Req 1 and 2 Prev 1 of 8l Next > n
