You have been asked to prepare a December cash budget for Ashton Company, a dist

Question

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 $41,200 b. Actual sales for October and November and expected sales for December are as follows Cash sales Sales on account October November December $75,400 $ 82,400 $ 97,200 490,000 544,000 629,000 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 c. d. Selling and administrative expenses are budgeted at $472,000 for December. Of this amount, $60,000 is e. A new web server for the Marketing Department costing $96,000 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 $11,500 will be paid during the month 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

Explanation / Answer

1) Schedule of Expected Cash collections December cash sales 97,200 Collections on account October sales (490000*18%) 88200 november sales (544000*60%) 326400 december sales (629000*20%) 125800 total cash collections 637,600 2) Schedule of Expected cash disbursement Payments to Suppliers: November purchases 183,000 December purchases (366000*30%) 109800 total cash payments 292,800 3) Cash budget Beginning cash balance 41,200 Add collections from customers 637,600 total cash available 678,800 less cash disbrsements payments to suppliers for inventory 292,800 Selling and administrative expenses 412,000 New web server 96,000 dividends paid 11,500 total cash disbursements 812,300 Excess(deficiency) of cash available over disbursement -133,500 Financing: Borrowings 153,500 Repayments 0 interest 0 total financing 153,500 Ending cash balance 20,000

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.