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a. The cash balance on December 1 is $44,400. 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. Cash sales Sales on account October November December $ 72,600 $ 86,600 $ 89,000 425,000 601,000 617,000 c. Purchases of inventory will total $358,000 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 $207,000, all of which will be paid in December. d. Selling and administrative expenses are budgeted at $459,000 for December. Of this amount, $64,500 is for depreciation. e. A new web server for the Marketing Department costing $114,000 will be purchased for cash during December, and dividends totalling $9,500 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. Schedule of Expected Cash Collections

a. The cash balance on December 1 is $44,400. 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. Cash sales Sales on account October November December $ 72,600 $ 86,600 $ 89,000 425,000 601,000 617,000 c. Purchases of inventory will total $358,000 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 $207,000, all of which will be paid in December. d. Selling and administrative expenses are budgeted at $459,000 for December. Of this amount, $64,500 is for depreciation. e. A new web server for the Marketing Department costing $114,000 will be purchased for cash during December, and dividends totalling $9,500 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. Schedule of Expected Cash Collections

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
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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: a. The cash balance on December 1 is $44,400. 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. Cash sales Sales on account October November $ 72,600 $ 86,600 425,000 601,000 c. Purchases of inventory will total $358,000 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 $207,000, all of which will be paid in December. d. Selling and administrative expenses are budgeted at $459,000 for December. Of this amount, $64,500 is for depreciation. e. A new web server for the Marketing Department costing $114,000 will be purchased for cash during December, and dividends totalling $9,500 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. Schedule of Expected Cash Collections December cash sales Collections on account: October sales November sales December sales Total cash collections December $ 89,000 617,000 S 0
Transcribed Image Text: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 $44,400. 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. Cash sales Sales on account October November $ 72,600 $ 86,600 425,000 601,000 c. Purchases of inventory will total $358,000 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 $207,000, all of which will be paid in December. d. Selling and administrative expenses are budgeted at $459,000 for December. Of this amount, $64,500 is for depreciation. e. A new web server for the Marketing Department costing $114,000 will be purchased for cash during December, and dividends totalling $9,500 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. Schedule of Expected Cash Collections December cash sales Collections on account: October sales November sales December sales Total cash collections December $ 89,000 617,000 S 0
2. Prepare a schedule of expected cash disbursements during December for merchandise purchases. Schedule of Expected Cash Disbursements Payments to suppliers: November purchases December purchases Total cash payments Beginning cash balance Add collections from customers Total cash available Less cash disbursements: 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. $ Borrowings Repayments Interest 0 Total financing Ending cash balance Payments to suppliers for inventory Selling and administrative expenses New web server Dividends paid Total cash disbursements Excess (deficiency) of cash available over disbursements Financing: Ashton Company Cash Budget For the Month of December $ 0 0 0 0 0
Transcribed Image Text:2. Prepare a schedule of expected cash disbursements during December for merchandise purchases. Schedule of Expected Cash Disbursements Payments to suppliers: November purchases December purchases Total cash payments Beginning cash balance Add collections from customers Total cash available Less cash disbursements: 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. $ Borrowings Repayments Interest 0 Total financing Ending cash balance Payments to suppliers for inventory Selling and administrative expenses New web server Dividends paid Total cash disbursements Excess (deficiency) of cash available over disbursements Financing: Ashton Company Cash Budget For the Month of December $ 0 0 0 0 0
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