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:

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 $47,000.
b.	Actual sales for October and November and expected sales for December are as follows:

	October		November		December
Cash sales	$	83,000	$	79,000	$	85,600
Sales on account		500,000		624,000		674,000

  

	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 $372,000 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 $189,500, all of which will be paid in December.
d.	Selling and administrative expenses are budgeted at $502,000 for December. Of this amount, $69,000 is for depreciation.
e.	A new web server for the Marketing Department costing $88,500 will be purchased for cash during December, and dividends totaling $14,500 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.

Explanation:

1.

October sales: $500,000 × 18% = $90,000

November sales: $624,000 × 60% = $374,400

December sales: $674,000 × 20% = $134,800

   
2.

December purchases: $372,000 × 30% = $111,600

 
3.

Selling and administrative expenses: $502,000 – $69,000 = $433,000

Calgon Products, a distributor of organic beverages, needs a cash budget for September. The

Calgon Products, a distributor of organic beverages, needs a cash budget for September. The following information is available:

a.	The cash balance at the beginning of September is $9,000.
b.	Actual sales for July and August and expected sales for September are as follows:

	July		August		September
Cash sales	$	6,500	$	5,250	$	7,400
Sales on account		20,000		30,000		40,000
Total sales	$	26,500	$	35,250	$	47,400

   

	Sales on account are collected over a three-month period as follows: 10% collected in the month of sale, 70% 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 $25,000 for September. Twenty percent of a month's inventory purchases are paid for during the month of purchase. The accounts payable remaining from August's inventory purchases total $16,000, all of which will be paid in September.
d.	Selling and administrative expenses are budgeted at $13,000 for September. Of this amount, $4,000 is for depreciation.
e.	Equipment costing $18,000 will be purchased for cash during September, and dividends totaling $3,000 will be paid during the month.
f.	The company maintains a minimum cash balance of $5,000. An open line of credit is available from the company's bank to bolster the cash balance as needed.

   

Required:
1.	Prepare a schedule of expected cash collections for September. (Do not round intermediate calculations. Omit the "$" sign in your response.)

Schedule of Expected Cash Collections
September cash sales	$ 7,400
September collections on account:
July sales	3,600
August sales	21,000
September sales	4,000
Total cash collections	$ 36,000

   

2.	Prepare a schedule of expected cash disbursements for inventory purchases for September. (Do not round intermediate calculations. Omit the "$" sign in your response.)

   

Schedule of Expected Cash Disbursements
Payments to suppliers:
August purchases	$ 16,000
September purchases	5,000
Total cash payments	$ 21,000

   

3.

Prepare a cash budget for September. Indicate in the financing section any borrowing that will be needed during September. Assume that any interest will not be paid until the following month. (Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Calgon Products Cash Budget For the Month of September
Cash balance, beginning		$ 9,000
Add cash receipts:
Collections from customers		36,000
Total cash available before current financing		45,000
Less disbursements:
Payments to suppliers for inventory	$ 21,000
Selling and administrative expenses	9,000
Equipment purchases	18,000
Dividends paid	3,000
Total disbursements		51,000
Excess (deficiency) of cash available over disbursements		-6,000
Financing:
Borrowings		11,000
Repayments		0
Interest		0
Total financing		11,000
Cash balance, ending		$ 5,000

Midwest Products is a wholesale distributor of leaf rakes. Thus, peak sales

Midwest Products is a wholesale distributor of leaf rakes. Thus, peak sales occur in August of each year as shown in the company’s sales budget for the third quarter, given below:

	July	August	September	Total
Budgeted sales (all on account)	$ 600,000	$ 900,000	$ 500,000	$ 2,000,000

From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. May sales totaled $430,000, and June sales totaled $540,000.
Required:
1.	Prepare a schedule of expected cash collections from sales, by month and in total, for the third quarter. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Schedule of Expected Cash Collections
	July	August	September	Total
May sales	$ 43,000	$ 0	$ 0	$ 43,000
June sales	378,000	54,000	0	432,000
July sales	120,000	420,000	60,000	600,000
August sales	0	180,000	630,000	810,000
September sales	0	0	100,000	100,000
Total cash collections	$ 541,000	$ 654,000	$ 790,000	$ 1,985,000

2.	Assume that the company will prepare a budgeted balance sheet as of September 30. Compute the accounts receivable as of that date. (Do not round intermediate calculations. Omit the "$" sign in your response.)

Total accounts receivable

$ n/r