value 1000 points You have been asked to prepare a December

value: 10.00 points 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: a. The cash balance on December 1 is $45,000. b. Actual sales for October and November and expected sales for December are as follows Cash sales Sales on account October November December 80,800 $ 74,000 $ 98,200 525,000 559,000 643,000 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 $371,000 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 $201,500, all of which will be paid in December c. d. Selling and administrative expenses are budgeted at $506,000 for December. Of this amount, $89,100 is e. A new web server for the Marketing Department costing $95,000 will be purchased for cash during f. The company maintains a minimum cash balance of $20,000. An open line of credit is available from the for depreciation December, and dividends totaling $13,500 will be paid during the month. company\'s bank to bolster the cash position as needed

Solution

1) Schedule of Expected Cash collections December cash sales 98,200 Collections on account October sales (525000*18%) 94500 november sales (559000*60%) 335400 december sales (643000*20%) 128600 total cash collections 656,700 2) Schedule of Expected cash disbursement Payments to Suppliers: November purchases 201,500 December purchases 371000*30%) 111300 total cash payments 312,800 3) Cash budget Beginning cash balance 45,000 Add collections from customers 656,700 total cash available 701,700 less cash disbrsements payments to suppliers for inventory 312,800 Selling and administrative expenses 416,900 New web server 95,000 dividends paid 13,500 total cash disbursements 838,200 Excess(deficiency) of cash available over disbursement -136,500 Financing: Borrowings 88,500 Repayments 0 interest 0 total financing 88,500 Ending cash balance 20,000