Reference no: EM132712092

Woof Ltd sells pet food in 10-kilogram bags for $12.40 per bag. Sales estimates (in the number of units) for the two months of the year are as follows:

Bags

January 20,000
February 17,000
All sales are cash sales.

Woof Ltd purchases bags of pet food at $9.40 per bag on credit and pays for them the month after the purchase. Purchases estimates (in the number of units) for the two months of the year are as follows:

Bags
January 19,250
February 16,500

1. Last December purchases were 21,000 bags.
2. General and administrative expenses total $8,000 per month (including $10,000 depreciation), and Woof Ltd pays for these expenses (except for depreciation) in the same month they are incurred. January's current liabilities (all to be paid in January) total $35,500. The business' cash balance on 1 January is $38,000.

Problem i. Calculate the total cash receipt for January and February. Provide workings.

Problem ii. Calculate the total cash payments for January and February. Provide workings.

Problem iii. Calculate the cash balance at the end of January and February. Provide workings.

Problem iv. Explain two benefits of preparing a cash budget for a company.