Sales on account are collected over a three-month period as follows: 20% collect
ID: 2555450 • Letter: S
Question
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.
Purchases of inventory will total $340,000 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 $173,500, all of which will be paid in December.
Prepare a schedule of expected cash collections for December.
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: Schedule of Expected Cash Collections December cash sales Collections on account: 96,800 October sales November sales December sales 80,100 357,600 125,000 $ 659,500 Total cash collections 2. Prepare a schedule of expected cash disbursements for merchandise purchases for December Schedule of Expected Cash Disbursements Payments to suppliers November purchases December purchases $ 173,500 102,000 $ 275,500 Total cash paymentsExplanation / Answer
I understand you want to know the amount to be shown in financing column.
As per point f) above, the company need to maintain $ 20,000 as cash balance at month end. In the given case, there is deficiency of $ 117,000 so the company will have to borrow $ 137,000 to get $ 20,000 as ending cash balance.
Hope this is what is required to be calculated. Please let me know if you need more help.