Homework Check my work You have been asked to prepare a December cash budget for

Question

Homework Check my work 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 $47600 b. Actual sales for October and November and expected sales for December are as follows Cash sales Sales on account $ 78,800 74,400 89, 600 $ 405,000 $ 615,000 628,000 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. c. Purchases of inventory will total $351,000 for December. Thirty percent of a month's inventory purchases are paid during the month total $194.500,all of which wil be paid in The accounts payable remaining from November's inventory purchases of purchase. December d. Selling and administrative expenses are budgeted at $512.000 for December. Of this amount, $81,400 is for depreciation e. A new web server for the Marketing Department costing $104,000 will be purchased for cash during December, and dividends totaling $11,500 will be paid during the month. f 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 K Prev 5 of9 Next >

Explanation / Answer

Req 1: Expected cassh collection in Dec Cash sales of dec 89600 Oct month credit sales (405000*18%) 72900 Nov month credit sales (615000*60%) 369000 Dec month credit sales (628000*20%) 125600 Total cash collections 657100 Req 2: Expected Cash payments made in Dec: Nov month purchases (194500*70%) 136150 Dec month Purchases (351000*30%) 105300 Total payment made 241450 Req 3: CASH BUDGET: Beginning cash balance 47600 Add: Colelctions from Sales 657100 Total Cash available 704700 Less: Cash disbursement Payment to supplier 241450 Selling and admin expense 430600 New web server 104000 Dividend paid 11500 Total cash disbursemnet 787550 Excess/(defficiency) -82850 Financing: Borrowing 102850 Repayment Interest Total financing 102850 Ending balance 20000

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