Reference no: EM132325731

Question

Sales(Excl GST)$

October 55000

November 66000

December 77000

Budget

January 80000

February 60000

Purchase( Excl GST) $

Actual

November- 16000

December- 24000

Budgeted

January- 18000

February- 20000

SALES INFORMATION:

· 20% of XXX's sales are for cash. The rest are on credit.

· All sales excl GST.

· On average, debtors pay to the following pattern:

60% of credit sales are collected in the month of sale and these customers receive a 5% discount (i.e. M)

35% of credit sales are collected in the month after sale and these customers don't receive any discount (i.e. M+1)

5% are estimated to be uncollectable and the company's policy is to write these debts off 12 months after the original transaction date.

PURCHASES INFORMATION:

· All purchases are on credit.

· All purchases excl GST.

· On average, all purchases are paid to the following pattern:

40% of credit purchases are paid for in the current month for which a 2% discount is received (i.e. M)

60% of credit purchases are paid for in the month after purchase (i.e. M+1) OTHER ADDITIONAL INFORMATION:

· Operating expenses are paid for in the same month that they are incurred. They are budgeted at 10% of sales(no GST).

· Depreciation is included in operating expenses and is $1,000 per month.

· Equipment will be paid for on 15 June for $30,000 (including GST).

· GST is accounted for on an accruals basis.

· The opening cash balance on 1 January is $100,000.

Perform a cash budget workings for collections from customers and cash payment to suppliers using the given information above.

Perform a Cash Budget for the month of January and February