Reference no: EM132906802

AIMS is a company manufacturing and selling a wide range of industrial products to large number of businesses throughout the country. You have been assigned the task of putting together a statement for the AIMS Company that shows its expected inflows and outflows of cash over the months of July 2021 through December 2021. You have been given the following data for ACME Company:

Point 1: Expected gross sales for May 2021 through December 2021 are as follows,

OMR 000
May 30000
June 29000
July 42500
August 50000
September 60000
October 62500
November 65000
December 70000

Two months' credit will be allowed to customers.

Point 2: The expected purchase of raw materials is as follows.

OMR 000
May 21000
June 20300
July 29750
August 35000
September 42000
October 43750
November 45500
December 49000

The firms pay 100% of its current month's raw materials purchase in the following month.

Point 3: Wages are as follows.

OMR 000
July 4250
August 5000
September 6000
October 6250
November 6500
December 7000
Wages are paid on monthly basis.

Point 4: During the month of July through December, the firm expects to have miscellaneous expenditures paid on the same month.

OMR 000
July 1500
August 2000
September 2500
October 3000
November 3500
December 4000

Point 5: Taxes will be paid in September in the amount of OMR 4,000,000 and in December in the amount OMR 4,500,000.

Point 6: The beginning cash balance in July is OMR 1,500,000.

Requirement

Problem A. Prepare a cash budget for July 2021 through December 2021.

Problem B. The management team at AIMS, consists of members with different expertise, some do not have any background of accounting. You are requested to discuss the purpose of budgetary control in companies like AIMS.