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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 company's operations:

$15$

points

a$.$ The cash balance on December $1$ is $$51,400.$

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

Cash sales

Sales on account

November

December

$ $71,600$ $ $80,200$ $ $88,600$

$420,000$

$580,000$

$652,000$

c$.$ Purchases of inventory will total $$287,000$ for December. Thirty percent of a month's inventory purchases are paid during the month of purchase. The accounts payable remaining from November's inventory purchases total $$160,000,$ all of which will be paid in$.$

December.

d$.$ Selling and administrative expenses are budgeted at $$501,000$ for December. Of this amount, $$92,300$ is for depreciation.

e$.$ A new web server for the Marketing Department costing $$113,500$ will be purchased for cash during December, and dividends totalling $$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 bolster the cash position as needed.

Required:

$1.$ Prepare a schedule of expected cash collections for December

Schedule of Expected Cash Collections

December cash sales

Collections on account:

October sales

November sales

December sales

Total cash collections $2.$ Prepare a schedule of expected cash disbursements during December for merchandise purchases.

Schedule of Expected Cash Disbursements

Payments to suppliers:

November purchases

December purchases

lotal cash payments

$3.$ 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.

Ashton Company

Cash Budget

For the Month of December

Beginning cash balance

Add collections from customers

Total cash available

Less cash disbursements:

Payments to suppliers for inventory

Selling and administrative expenses

New web server

Dividends paid

Total cash disbursements

Excess $($deficiency$)$ of cash available over disbursements

Financing:

Borrowings

Repayments

Interest

Total financing

Ending cash balance

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