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:

Sales on accounts 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)Purchase of inventory will total $280,000 for December. Thirty percent of 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 budget 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 bolster the cash position as needed.
Required:
1.Prepare a schedule of expected cash collections for December.
2.Prepare a schedule of expected cash disbursements for merchandise purchases for December.
3.Prepare a cash budget for December. Indicate in the financing section any borrow that will be needed the month. Assume that any interest will not be paid until the following month.