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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:

The cash balance on December $1$ is $$41,000.$

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.

October November December

Cash sales $ $68,400$ $ $87,400$ $ $95,800$

Sales on account $415,000614,000692,000$

Purchases of inventory will total $$376,000$ for December. Thirty percent of a month$$s inventory purchases are paid during the month of purchase. The accounts payable remaining from November$$s inventory purchases total $$174,500,$ all of which will be paid in December.

Selling and administrative expenses are budgeted at $$452,000$ for December. Of this amount, $$63,500$ is for depreciation.

A new web server for the Marketing Department costing $$86,500$ will be purchased for cash during December, and dividends totalling $$10,500$ will be paid during the month.

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.

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