Reference no: EM132620396

Milestone Enterprises needs a cash budget for December 2020. The cash balance at the beginning of December is expected to be $ 18,000. The sales for October, November and December are expected to be as follows:

Information                October ($)                November ($)                  December ($)

Cash Sales                        26,000             21,000                          30,000

Sales on Account (Credit Sales)   80,000         120,000                        160,000

Total Sales                            106,000             141,000                      190,000

Sales on account are collected over a three-month period in the following rates:

20% in the month of sale,

50% in the month following sale

30 % in the second month following sale

Additional information includes:

(a) Purchases of inventory will total $ 100,000 for December; 20% will be paid for in December. Accounts payable from November's inventory purchases is $ 64,000, all of which will be paid in December.

(b) Selling and administrative expenses are budgeted at $ 52,000 for December; of which $ 16,000 is for depreciation, thus total expenses payable is $ 36,000 (52,000 - 16,000)

(c) An Equipment costing $ 72,000 will be purchased for cash during December, and other miscellaneous cash expenses of $ 12,000 will be paid during December.

Required

Question (a) schedule of cash collections (cash and credit collections) for December

Question (b) Cash Budget for the month of December