Lansing Auto Pats, Inc., has projected sales of $25,000 in October , $35,000 in November, and $30,000 in December of the company’s sales 20 percent are paid for by cash and 80 percent are sold on credit. The credit sales are collected one month after the sale. Determine collections for November and December. Also assume that the company’s cash payment for November and December are $30,400 and $29,800, respectively. The beginning balance in November is $6,000, which is desired minimum balance. Prepare a cash budget with borrowing needed or repayments for November and December. (you will need to prepare a cash receipts schedule first.)

To determine the collections for November and December and prepare a cash budget with borrowing needed or repayments, we need to follow the steps below:

Step 1: Prepare a Cash Receipts Schedule:
In the Cash Receipts Schedule, we need to calculate the cash collected from credit sales after one month of the sale.

1) Calculate the cash collections for November:
October Credit Sales: $35,000 * 0.80 = $28,000
November Cash Collections: $28,000 * 0.20 = $5,600

2) Calculate the cash collections for December:
November Credit Sales: $30,000 * 0.80 = $24,000
December Cash Collections: $24,000 * 0.20 = $4,800

Now we have the cash collections for November and December.

Step 2: Prepare the Cash Budget:
Now, we will prepare the Cash Budget using the cash collections and payment information:

November Cash Budget:
Beginning Balance: $6,000
Cash Collections from Credit Sales: $5,600
Total Cash Available: $6,000 + $5,600 = $11,600
Cash Payments: $30,400
Excess (or Deficiency): $11,600 - $30,400 = ($18,800)

Since we have a deficiency of $18,800, the company will need to borrow additional funds to cover the shortfall.

December Cash Budget:
Beginning Balance: $6,000
Cash Collections from Credit Sales: $4,800
Total Cash Available: $6,000 + $4,800 = $10,800
Cash Payments: $29,800
Excess (or Deficiency): $10,800 - $29,800 = ($19,000)

Similarly, in December, there is a deficiency of $19,000, requiring additional borrowing to cover the shortfall.

In summary, based on the cash receipts schedule, the cash collections for November and December are $5,600 and $4,800, respectively. The cash budget shows a deficiency of $18,800 in November and $19,000 in December, requiring additional borrowing to cover the shortfalls.