Question

Prepare the required cash budgets for
• Constructing budepts Bolle Cross Py Statement of financial position as at 31 May 2012 Cument assets Berk Accounts receivable Invertory 20.000 200,000 20.000 Non-current assets het of depreciation 310,000 190.000 500.000 Current liabilities Accounts payable Accruals wages Accruals expenses 80.000 2.500 2000 Capital and reserves 84500 415.500 500.000 Accounts payable represent purchases for May and accounts receivable the sales for April and May at $100,000 per month The directors are seeking finance from a bank and have produced the following profit forecast, but the bank, before deciding, has asked for a cash budget for the period showing the maximum anticipated finance needed from month to month. The profit forecast for the next six months is: Sales Gross profit (20% fixed Wages and salaries 100.000 20,000 20.000 1.670 8.000 19.670 100,000 150.000 30000 20.000 1.670 8.000 330 110,000 250.000 50,000 20,000 1.660 8.000 20,340 180,000 250.000 50,000 30,000 1,670 15.000 3,330 180.000 250.000 50,000 30.000 1.670 15.000 Nov 250.000 50,000 30,000 1,660 15.000 2340 180,000 Other expenses Net profit Stock requirement at month and 180.000 Further information is given below: 1. At each month end, one-eighth of a month's wages and salaries, and a quarter of other expenses, would be outstanding Rent at the rate of $20,000 per annum is payable quarterly in arrears on 31 August, 30 November, etc. Assume that one month's credit will be taken on purchases as previously, and that accounts receivable will continue to take two months' credit New fixed assets (additional) will be delivered in June and must be paid for on 31 August; cost $200,000. If the bank grants finance, it will continue an existing $50,000 overdraft facility, and give a five-year loan of a fixed amount as soon as necessary to maintain the overdraft within its limit for the whole period under review.

Answer 1

^{Particulars Stalement showing Cain collection Budget April. & may 10,000 gooo Cain Sales: June ISOO Credit Sales : o Current month M 20:00 y credit sales 480cm 3800 4800 0 4000 80% of previous - (4600X8001) 19200 (24600X80%.) 16ooo (20, 600 x 80s.). Tatal can collection 26000 32200 26800
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