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 $45,600.
Actual sales for October and November and expected sales for December are as follows:
October | November | December | ||||
Cash sales | $ | 76,000 | $ | 76,400 | $ | 90,800 |
Sales on account | $ | 450,000 | $ | 569,000 | $ | 604,000 |
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.
Purchases of inventory will total $288,000 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 $162,500, all of which will be paid in December.
Selling and administrative expenses are budgeted at $495,000 for December. Of this amount, $88,800 is for depreciation.
A new web server for the Marketing Department costing $83,500 will be purchased for cash during December, and dividends totaling $17,000 will be paid during the month.
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.
Required:
1. Calculate the expected cash collections for December.
2. Calculate the 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.
1. Expected cash collection:
December | |
Cash sales | $90,800 |
Credit sales: | |
December (604,000 * 20%) | 120,800 |
November (569,000 * 60%) | 341,400 |
October (450,000 * 18%) | 81,000 |
Total | $634,000 |
2. Expected cash disbursements for merchandise purchases:
December | |
November purchases | $162,500 |
December purchases ($288,000 * 30%) | 86,400 |
Total | $248,900 |
3. Cash budget
December | |
Cash balance, Dec.1 | $45,600 |
Receipts: | |
Cash collections | 634,000 |
Total cash available | $679,600 |
Less: Disbursement: | |
Merchandise purchases | 248,900 |
Selling and administrative expenses ($495,000 - 88,800) | 406,200 |
Purchase of New web server | 83,500 |
Payment of dividend | 17,000 |
Total disbursements | $755,600 |
Cash surplus / (deficit) | (76,000) |
Financing: | |
Borrowing (76,000 + 20,000) | 96,000 |
Interest | |
Cash balance. Dec.31 | 20,000 |
You have been asked to prepare a December cash budget for Ashton Company, a distributor of...
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 $53,400. Actual sales for October and November and expected sales for December are as follows: October November December Cash sales $ 77,000 $ 81,200 $ 87,800 Sales on account $ 435,000 $ 538,000 $ 644,000 Sales on account are collected over a three-month period as follows:...
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 $40,000. Actual sales for October and November and expected sales for December are as follows: October November December Cash sales $ 65,000 $ 70,000 $ 83,000 Sales on account $ 400,000 $ 525,000 $ 600,000 Sales on account are collected over a three-month period as follows:...
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 $42,000. Actual sales for October and November and expected sales for December are as follows: October November December Cash sales $ 80,600 $ 75,800 $ 100,200 Sales on account $ 505,000 $ 539,000 $ 612,000 Sales on account are collected over a three-month period as follows:...
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:...
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 $41,000. Actual sales for October and November and expected sales for December are as follows: October November December Cash sales $ 68,400 $ 87,400 $ 95,800 Sales on account $ 415,000 $ 614,000 $ 692,000 Sales on account are collected over a three-month period as follows:...
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 $45,400. Actual sales for October and November and expected sales for December are as follows: October November December Cash sales $ 67,800 $ 70,400 $ 93,000 Sales on account $ 465,000 $ 562,000 $ 614,000 Sales on account are collected over a three-month period as follows:...
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 $57,600. Actual sales for October and November and expected sales for December are as follows: October November December Cash sales $ 65,600 $ 74,800 $ 83,200 Sales on account $ 480,000 $ 602,000 $ 671,000 Sales on account are collected over a three-month period as follows:...
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 $41,000. Actual sales for October and November and expected sales for December are as follows: October November December Cash sales $ 68,400 $ 87,400 $ 95,800 Sales on account $ 415,000 $ 614,000 $ 692,000 Sales on account are collected over a three-month period as follows:...
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 will be $39,000. b. Actual sales for October and November and expected sales for December are as follows: Cash sales Sales on account October $ 65,000 397,000 November $ 65,000 522,000 December $ 82,600 598,000 Sales on account are collected over a three-month period in the...
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 $58,600. b. Actual sales for October and November and expected sales for December are as follows: Cash sales Sales on account October November December $ 73,200 $ 78,000 $ 92,000 $ 485,000 $ 568,000 $ 663,000 Sales on account are collected over a three-month period...