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  3. you have been asked to prepare a december cash budget...

Question: you have been asked to prepare a december cash budget...

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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 companys 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 November December $65,000 70,000 $ 83,000 $400,000 $525,000 $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 months inventory purchases are paid during the month of purchase. The accounts payable remaining from Novembers 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 companys 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

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