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 $11,700.
b. Actual sales for October and November and expected sales for December are as follows:
October November December
Cash sales $5,400 $4,300 $9,500
Sales on account $24,000 $27,000 $44,000
Sales on account are collected over a three-month period as follows: 5% collected in the month of sale, 70% collected in the month following sale, and 21% collected in the second month following sale. The remaining 4% is uncollectible.
c. Purchases of inventory will total $25,000 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 $16,000, all of which will be paid in December.
d. Selling and administrative expenses are budgeted at $15,000 for December. Of this amount, $3,000 is for depreciation.
e. A new Web server for the Marketing Department costing $17,000 will be purchased for cash during December, and dividends totaling $5,000 will be paid during the month.
f. The company maintains a minimum cash balance of $14,000. An open line of credit is available from the company's bank to bolster the cash position as needed.
Requirement 1:
Prepare a schedule of expected cash collections for December. (Omit the "$" sign in your response.)
December cash sales $
Collections on account:
October sales
November sales
December sales
Total cash collections $
Requirement 2:
Prepare a schedule of expected cash disbursements for merchandise purchases for December. (Omit the "$" sign in your response.)
November purchases $
December purchases
Total cash payments $