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: Cash sales Sales on account October $ 65,000 $ 400,000 November $ 70,000 $ 525,000 December $ 83,000 $ 600,000 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
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: Cash sales Sales on account October $ 65,000 $ 400,000 November $ 70,000 $ 525,000 December $ 83,000 $ 600,000 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
I need help with this three part problem
1. Calculate the expected cash collections for December.
2. Calculate the expected cash disbursements for merchandise purchases for December.
![**Ashton Company Cash Budget**
**For the Month of December**
---
**Beginning Cash Balance**
[Space for amount]
---
**Add Collections from Customers**
[Space for amount]
---
**Total Cash Available**
[Space for amount]
---
**Less Cash Disbursements:**
- Payments to Suppliers for Inventory
[Space for amount]
- Selling and Administrative Expenses
[Space for amount]
- New Web Server
[Space for amount]
- Dividends Paid
[Space for amount]
**Total Cash Disbursements**
[Space for total]
---
**Excess (Deficiency) of Cash Available Over Disbursements**
[Space for amount]
---
**Financing:**
- Borrowings
[Space for amount]
- Repayments
[Space for amount]
- Interest
[Space for amount]
**Total Financing**
[Space for total]
---
**Ending Cash Balance**
[Space for amount]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0bb7b501-a94a-4b0e-8b1b-332e5e4698ff%2F52319c54-910f-4aca-ba5b-c2d93479d4bd%2Faons9t9_processed.png&w=3840&q=75)
Transcribed Image Text:**Ashton Company Cash Budget**
**For the Month of December**
---
**Beginning Cash Balance**
[Space for amount]
---
**Add Collections from Customers**
[Space for amount]
---
**Total Cash Available**
[Space for amount]
---
**Less Cash Disbursements:**
- Payments to Suppliers for Inventory
[Space for amount]
- Selling and Administrative Expenses
[Space for amount]
- New Web Server
[Space for amount]
- Dividends Paid
[Space for amount]
**Total Cash Disbursements**
[Space for total]
---
**Excess (Deficiency) of Cash Available Over Disbursements**
[Space for amount]
---
**Financing:**
- Borrowings
[Space for amount]
- Repayments
[Space for amount]
- Interest
[Space for amount]
**Total Financing**
[Space for total]
---
**Ending Cash Balance**
[Space for amount]
![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:
\[
\begin{array}{ccc}
& \text{October} & \text{November} & \text{December} \\
\hline
\text{Cash sales} & \$65,000 & \$70,000 & \$83,000 \\
\text{Sales on account} & \$400,000 & \$525,000 & \$600,000 \\
\end{array}
\]
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 increase its cash balance as needed.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0bb7b501-a94a-4b0e-8b1b-332e5e4698ff%2F52319c54-910f-4aca-ba5b-c2d93479d4bd%2F0lyptl_processed.png&w=3840&q=75)
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 $40,000.
b. Actual sales for October and November and expected sales for December are as follows:
\[
\begin{array}{ccc}
& \text{October} & \text{November} & \text{December} \\
\hline
\text{Cash sales} & \$65,000 & \$70,000 & \$83,000 \\
\text{Sales on account} & \$400,000 & \$525,000 & \$600,000 \\
\end{array}
\]
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 increase its cash balance as needed.
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