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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:

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

Actual sales for October and November and expected sales for December are as follows:

October November December

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

Sales on account $ $490,000$ $ $544,000$ $ $629,000$

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 $$366,000$ for December. Thirty percent of a month$$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.

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

A new web server for the Marketing Department costing $$96,000$ will be purchased for cash during December, and dividends totaling $$11,500$ will be paid during the month.

The company maintains a minimum cash balance of $$20,000.$ An open line of credit is available from the company$$s 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 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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