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Ashton Company, a distributor of exercise equipment, is preparing a cash budget for December. It provided the following information: The cash balance on December 1

Ashton Company, a distributor of exercise equipment, is preparing a cash budget for December. It provided the following information:
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: 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% are uncollectible.
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.
Selling and administrative expenses are budgeted at $430,000 for December. Of this amount, $50,000 is for depreciation.
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.
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:
For December:
Calculate the expected cash collections.
Calculate the expected cash disbursements for merchandise purchases.
Prepare a cash budget. Indicate in the financing section any borrowing needed during the month. Assume any interest will not be paid until the following month.

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