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 $50,800. Actual sales for October and November and expected sales for December are as follows: October November December Cash sales $ 77,800 $ 83,400 $ 99,800 Sales on account $ 475,000 $ 558,000 $ 622,000 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 $375,000 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 $206,500, all of which will be paid in December. Selling and administrative expenses are budgeted at $448,000 for December. Of this amount, $97,200 is for depreciation. A new web server for the Marketing Department costing $80,000 will be purchased for cash during December, and dividends totaling $14,500 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 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 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.