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 The cash balance on December 1 is $56,800 Actual sales for October and November and expected sales for December are as follows October November December Cash sales $ 73,400 $ 87,600 $ 87,200 Sales on account $ 430,000 $ 554,000 $ 650,000 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 Purchases of inventory will total $305,000 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 $172,500, all of which will be paid in December Selling and administrative expenses are budgeted at $481,000 for December Of this amount, $84,700 is for depreciation A new web server for the Marketing Department costing $110,500 will be purchased for cash during December, and dividends totaling $12,000 will be paid during the month 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 a Calculate the expected cash collections for December b Calculate the expected cash disbursements for merchandise purchases for December c 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

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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 companys operations:

The cash balance on December 1 is $56,800.
Actual sales for October and November and expected sales for December are as follows:

	October		November		December
Cash sales	$	73,400	$	87,600	$	87,200
Sales on account	$	430,000	$	554,000	$	650,000

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.

Purchases of inventory will total $305,000 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 $172,500, all of which will be paid in December.
Selling and administrative expenses are budgeted at $481,000 for December. Of this amount, $84,700 is for depreciation.
A new web server for the Marketing Department costing $110,500 will be purchased for cash during December, and dividends totaling $12,000 will be paid during the month.
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. a.Calculate the expected cash collections for December.

b. Calculate the expected cash disbursements for merchandise purchases for December.

c. 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.