You have been asked to prepare a December cash budget for Fairview Company, a distributor of

exercise equipment. The following information is available about the company$$s operations:

a$.$ The cash balance on December $1$ is $$41,200.$

b$.$ Actual sales for October and November and expected sales for December are shown below.

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.

October November December

Cash sales $ $75,400$ $ $82,400$ $ $97,200$

Sales on

account $490,000544,000629,000$

c$.$ Purchases of inventory will total $$366,000$ for December. Thirty percent of a month$$s

inventory purchases are paid during the month of purchase. The accounts payable remaining

from November$$s inventory purchases total $$183,000,$ all of which will be paid in December.

d$.$ Selling and administrative expenses are budgeted at $$472,000$ for December. Of this

amount, $$60,000$ is for depreciation.

e$.$ A new web server for the Marketing Department costing $$96,000$ will be purchased for cash

during December, and dividends totalling $$11,500$ 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 to bolster the cash position as needed.

Requirement $1$: $(15$ Marks$)$

Prepare a schedule of expected cash collections for December.

Requirement $2$: $(15$ Marks$)$

Prepare a schedule of expected cash disbursements during December for merchandise purchases.

Requirement $3$: $(20$ Marks$)$

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.

You have been asked to prepare a December cash budget for Fairview Company, a distributor of exercise equipment. The following information is available about the company's operations:

a$.$ The cash balance on December $1$ is $$41,200.$

b$.$ Actual sales for October and November and expected sales for December are shown below. 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.

$\backslash$table$[[$Cash sales,October,November,December$],[$$$,75,400,$$$,82,400,$$$,97,200],[\backslash$table$[[$Sales on$],[$account$]],,490,000,,544,000,,629,000]]$

c$.$ Purchases of inventory will total $$366,000$ for December. Thirty percent of a month's inventory purchases are paid during the month of purchase. The accounts payable remaining from November's inventory purchases total $$183,000,$ all of which will be paid in December.

d$.$ Selling and administrative expenses are budgeted at $$472,000$ for December. Of this amount, $$60,000$ is for depreciation.

e$.$ A new web server for the Marketing Department costing $$96,000$ will be purchased for cash during December, and dividends totalling $$11,500$ 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 to bolster the cash position as needed.

Requirement $1$: $(15$ Marks$)$

Prepare a schedule of expected cash collections for December.

Requirement $2$: $(15$ Marks$)$

Prepare a schedule of expected cash disbursements during December for merchandise purchases.

Requirement $3$: $(20$ Marks$)$

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.