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You have been asked to prepare a December cash bud...




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 $40,000. b. Actual sales for October and November and expected sales for December are as follows October November December Cash sales $ 65,000.00 $ 70,000.00 $ 83,000.00 Sales on account $ 400,000.00 $ 525,000.00 $ 600,000.00 Sales on accounts are collected over a three-month period as follows: 20% collected in the month sales, 60% collected in the month following sales, and 18% collected in the second month following sale. The remaining 2% is uncollectible. c. Purchases of inventory will total $280,000 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 $161,000, all of which will be paid in December. d. Selling and administrative expenses are budgeted at $430,000 for December. Of this amount, $50,000 is for depreciation. e. A new web server for the Marketing Department costing $76,000 will be purchased for cash during December, and dividends totaling $9,000 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 for merchandise purchases for December. 3. Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month.


Paper#6348 | Written in 18-Jul-2015

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