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 $43,200.
b. Actual sales for October and November and expected sales for December are as follows:
October November December
Cash sales 76,200 70,800 84,400
Sales on account 520,000 527,000 649,000
Sales on account are collected over a three-month period follows: 20% in the month of sale, 60% collected in the month as collected following sale, and 18% in the second month following sale. The remaining 2% uncollectible.
c. Purchase of inventory will total $370,000 for December. Thirty percent of a month's inventory of inventory will total 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 December.
d. Selling and administrative expenses are budgeted at $433,000 for December. Of this amount, $99,800 is for depreciation.
e. A new web server for the Marketing Department costing $78,500 will be purchased for cash during December, and dividends totaling $18,500 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
Students succeed in their courses by connecting and communicating with an expert until they receive help on their questions
Consult our trusted tutors.