Question

Question 3. (20 marks) Alco Inc. deals in wooden charis and had following sales revenue: Month Jan Feb Mar Sales Revenue 132,000 168,000 149,000 155,000 161,000 177,000 Apr May Jun The company charges 20% margin on the purchase price of the goods. The balance of inventory as at January 01 was $78,000 and at June 30 was $56,500. The purchases made were paid 50% in the month of purchases, 25% in the next month, and 25% in the following month

prepare cash budget

need ASAP

Prepare Cash Budget

Answer 1

	Jan	Feb	March	April	May	June	Total
Sales	$ 132,000	$ 168,000	$ 149,000	$ 155,000	$ 161,000	$ 177,000	$ 942,000
Cost of Goods sold	$ 110,000	$ 140,000	$ 124,167	$ 129,167	$ 134,167	$ 147,500	$ 785,000
Add - Closing Inventory						$    56,500	$    56,500
Less - Opening Inventory	$ (78,000)						$ (78,000)
Purchase	$    32,000	$ 140,000	$ 124,167	$ 129,167	$ 134,167	$ 204,000	$ 763,500
Payment Schedule
Purchase of Jan	$    16,000	$      8,000	$      8,000				$    32,000
Purchase of Feb		$    70,000	$    35,000	$    35,000			$ 140,000
Purchase of March			$    62,083	$    31,042	$    31,042		$ 124,167
Purchase of April				$    64,583	$    32,292	$    32,292	$ 129,167
Purchase of May					$    67,083	$    33,542	$ 100,625
Purchase of June						$ 102,000	$ 102,000
Total Payments	$    16,000	$    78,000	$ 105,083	$ 130,625	$ 130,417	$ 167,833	$ 627,958
Net Cash	$ 116,000	$    90,000	$    43,917	$    24,375	$    30,583	$      9,167	$ 314,042

*Assumed all sales to be cash sales in absence of information and inventory is adjusted in Begining and end