50.1K

Verified Solution

Link Copied!

and plz

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 $53,400. b. Actual sales for October and November and expected sales for December are shown below. 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 $341,000 for December. Thirty percent of a month's inventory purchases are paid duting the month of purchase. The accounts payable remaining from November's inventory purchases total $165,000, all of which will be paid in December. d. Selling and administrative expenses are budgeted at $516,000 for December. Of this amount, $94,900 is for depreciation e. A new web server for the Marketing Department costing $121.500 will be purchased for cash during December, and dividends totalling $13,000 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 bolster the cash position as needed. Required: 1. Prepare a schedule of expected cash collections for December. 2. Prepare a schedule of expected cash disbursements during December for merchandise purchases. 3. 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. Cash Budget For the Month of December Beginning cash balance Add collections from customers Total cash available Less cash disbursements: \begin{tabular}{|l|l|l|} \hline Payments to suppliers for inventory & & \\ \hline Selling and administrative expenses & & \\ \hline New web server & & \\ \hline Dividends paid & & \\ \hline Total cash disbursements & & 0 \\ \hline Excess (deficiency) of cash available over disbursements & & 0 \\ \hline Financing: & & \\ \hline Borrowings & & \\ \hline Repayments & & \\ \hline Interest & & \\ \hline Total financing & & 0 \\ \hline Ending cash balance & & $ \\ \hline \end{tabular}

Answer & Explanation Solved by verified expert

See Answer