Sales on account are collected over a three-month period as follows: 5% collecte

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Sales on account are collected over a three-month period as follows: 5% collected in the month of sale, 65% collected in the month following sale, and 28% collected in the second month following sale. The remaining 2% is uncollectible.

Purchases of inventory will total $30,000 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 $15,000, all of which will be paid in December.

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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:

Explanation / Answer

there are minor changes in numerica but all the format of answer are same

Requirement 1:
Prepare a schedule of expected cash collections for December. (Omit the "$" sign in your response.)

December cash sales $ 9,500
Collections on account:
October sales 5,040
November sales 18,900
December sales 2,200
Total cash collections $35,640

Requirement 2:
Prepare a schedule of expected cash disbursements for merchandise purchases for December. (Omit the "$" sign in your response.)

November purchases $16,000
December purchases 7,500
Total cash payments $ 23,500

Cash Budget
Balance in the beginning $11,700
Cash received from sales / debtors $36,640
Loan from credit available $23,160
Total cash available 71,500
Less: Payments-
Payment to suppliers 23,500
Selling and administrative exp. 12,000
Web server expense 17,000
Cash Dividend paid 5,000 57,500
Balance at the end 14,000
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