o.mheducation.com/hm.tpx compieteu or the work you iave done so ta value 10.00 p
ID: 2470758 • Letter: O
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o.mheducation.com/hm.tpx compieteu or the work you iave done so ta value 10.00 points You have been asked to prepare a December cash budget for Ashton Company, a distibutor of exercise equipment. The following information is available about the company's operations a The cash balance on December 1 is $43,200 b. Actual sales for October and November and expected sales for December are as follows Cash sales Sales on account October November December $ 76,200 $ 70,800 $ 84,400 520,000 527,000 649,000 nt 520,000 527.000 649.000 Sales on account are collected over a three-month penod as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second The remaining 2% is uncollectible month following sale c. Purchases of inventory will total $370,000 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 $193,000, all of which will be paid in Dec ember d. Selling and administrative expenses are budgeted at $433,000 for December Of this amount. $99,800 e. A new web server for the Marketing Department costing $78.500 will be purchased for cash f The company maintains a minimum is for depreciation December, and dividends totaling $18.500 will be paid during the month the company's bank to bolster the cash position as needed during cash balance of $20,000. An open line of credit is available from Required: 1. Prepare a schedule of expected cash collections for December Schedule of December cash sales Collections on account d Cash Collections 5 43.200x October sales November sales December sales Total cash collections 43.200 2 Prepare a schedule of expected cash disbursements for merchandise purchases for December Payments to suppliers November purchases December purchases Total ish paymentsExplanation / Answer
1
Schedule for Expected Cash Collections for December
December Cash Sales
$ 84,400
Collection on Account:
October Sales (520000*18%)
$ 93,600
November Sales (527000*60%)
$316,200
December Sales (649000*20%)
$129,800
Total Cash Collections
$624,000
2
Schedule for Expected Cash Disbursement for Merchandise purchase for December:
Payment to suppliers:
November Purchases
$193,000
December Purchases (370000*30%)
$111,000
Total Cash Payments
$304,000
3
Ashton Company
Cash Budget
For the Month of December
Beginning cash balance
$ 43,200
Add: Collection from Customers
$624,000
Total Cash Available
$667,200
Less: Cash Disbursements:
Payment to suppliers for inventory
$304,000
Selling and administrative expenses (433000-99800)
$333,200
New Web server
$ 78,500
Dividend Paid
$ 18,500
Total Cash Disbursements
$734,200
Excess (deficiency) of cash available over disbursements
$ (67,000)
Financing
Borrowings (67000+ 20000 minimum balance)
$ 87,000
Repayments
$ -
Interest
$ -
Total Financing
$ 87,000
Ending cash balance
$ 20,000
1
Schedule for Expected Cash Collections for December
December Cash Sales
$ 84,400
Collection on Account:
October Sales (520000*18%)
$ 93,600
November Sales (527000*60%)
$316,200
December Sales (649000*20%)
$129,800
Total Cash Collections
$624,000
2
Schedule for Expected Cash Disbursement for Merchandise purchase for December:
Payment to suppliers:
November Purchases
$193,000
December Purchases (370000*30%)
$111,000
Total Cash Payments
$304,000
3
Ashton Company
Cash Budget
For the Month of December
Beginning cash balance
$ 43,200
Add: Collection from Customers
$624,000
Total Cash Available
$667,200
Less: Cash Disbursements:
Payment to suppliers for inventory
$304,000
Selling and administrative expenses (433000-99800)
$333,200
New Web server
$ 78,500
Dividend Paid
$ 18,500
Total Cash Disbursements
$734,200
Excess (deficiency) of cash available over disbursements
$ (67,000)
Financing
Borrowings (67000+ 20000 minimum balance)
$ 87,000
Repayments
$ -
Interest
$ -
Total Financing
$ 87,000
Ending cash balance
$ 20,000
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