Sales on account are collected over a three-month period as follows: 20% collect

Question

   

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 $352,000 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 $209,000, all of which will be paid in December.

  

  

Prepare a schedule of expected cash disbursements for merchandise purchases for December.

  

  

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.

  

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

1) Cash Collection in December :-

2) Payment to Suppliers :-

3) Cash Budget :-

Particulars Amount($) December Cash Sales 95000 Collections on Account :- October Sales ($460000*18%) 82800 November Sales ($534000*60%) 320400 December Sales ($606000*20%) 121200 Total Cash Collections 619400

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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