Reference no: EM132569485
Question - Bluebird Ltd has provided the following forecasted items for the months of July through to September 2020.
|
|
July $
|
August $
|
September $
|
|
Sales
|
13,000
|
14,000
|
15,000
|
|
Purchase
|
9,400
|
8,000
|
10,000
|
|
Operating expenses
|
3,600
|
6,400
|
5,000
|
Other Information: 35% are cash sales, the remaining 65% of credit sales which are collected as follows:
30% in the month of the sale
50% in the month after the sale
28% in the 2nd month after the sale
2% are never collected due to the customer going bankrupt
Sales in the months of May and June were $11,000 and $10,000 respectively.
Operating expenses include depreciation expense. Depreciation expense each month is $900. All expenses and purchases are paid for in the same month that they are incurred.
Bluebird expects to sell some old machinery for $7,000 in August. New machinery worth $9,500 will be purchased in September.
The cash balance on 1st July 2020 is $5,700.
Required -
a. Make a schedule of the Cash receipts from Accounts receivable showing the collections for the three months of July through to September.
b. Make a Cash budget for Bluebird Ltd for the three months of July through to September 2020.