"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 $41,200. actual sales for october and november and expected sales for december are as follows:
october november december
cash sales $75,400 $82,400 $97,200
sales on account $490,000 $544,000 $629,000
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.
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. assume that any interest will not be paid until the following month."