Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 $40,000. b. Actual sales for October and November and expected sales for December are as follows:

image text in transcribed

c. Purchases of inventory will total $280,000 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 $161,000, all of which will be paid in December. d. Selling and administrative expenses are budgeted at $430,000 for December. Of this amount, $50,000 is for depreciation. e. A new web server for the Marketing Department costing $76,000 will be purchased for cash during December, and dividends totaling $9,000 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 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 cash budget for December (please show steps, thanks!)

October November December Cash sales $65,000$400,000$70,000$525,000$83,000$600,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management And Cost Accounting

Authors: Colin Drury

9th Edition

1408093936, 978-1408093931

Students also viewed these Accounting questions