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Chrome File Edit View History Bookmarks People Window Help @ Women's FaxY Access Conr×° Principles of Xya M Tops Online x- C ezto.mheducation.com/hm.tpx 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 $53,200. b. Actual sales for October and November and expected sales for December are as follows: Cash sales Sales on account October November December $75,600 $ 89,000 88,200 410,000 574,000 609,000 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. Purchases of inventory will total $318,000 for December. Thirty percent of a month's inventory purchases are paid during the month of purchase. The accounts payable remaining from Novembers inventory purchases total $172.000, all of which will be paid in December c. d. Selling and administrative expenses are budgeted at $525,000 for Decembe. Of this amount, $57,700 is e. A new web server for the Marketing Department costing $82,000 will be purchased for cash during f. The company maintains a minimum cash balance of $20,000. An open line of credit is available from the Required for depreciation. December, and dividends totaling $12,000 will be paid during the month. company's bank to bolster the cash position as needed 1. Prepare a schedule of expected cash collections for December Schedule of Expected Cash Collections December cash sales Collections on account October sales November sales December sales Sta.cash 12

Explanation / Answer

Schedule of Expected Cash Collections December cash sales 88200 Collections on account October sales (18%) 73800 November sales (60%) 344400 December sales (20%) 121800 Total cash collections 628200 Schedule of Expected Cash Disbursements Payments to suppliers: November purchases 172000 December purchases (30%) 95400 Total cash payments 267400 Ashton Company Cash Budget For the month of December Beginning cash balance 53200 Add collections from customers 628200 Total cash available 681400 Less cash disbursements: Payments to suppliers for inventory 267400 Selling and administrative expenses 467300 New web server 82000 Dividends paid 12000 Total cash disbursements 828700 Excess (deficiency) of cash available over disbursements (147300) Financing: Borrowings 167300 Repayments Interest Total financing 167300 Ending cash balance 20000

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