Reference no: EM132638965
Problem - The following information is available from the financial records of Pascoe Ltd:
|
|
Sales
|
Purchases
|
|
April 1
|
$360,000
|
$210,000
|
|
May
|
330,000
|
240,000
|
|
June
|
300,000
|
180,000
|
|
July
|
390,000
|
270,000
|
Receipts from customers are normally 60 per cent in the month of sale, 30 per cent in the month following the sale, and 8 per cent in the second month following the sale. The balance is expected to be uncollectable.
Pascoe takes full advantage of the 2 per cent discount allowed on purchases paid for by the 10th day of the following month.
Purchases for August are budgeted at $600 000, and sales for August are forecast at $660 000.
Cash payments for expenses (other than purchases) are expected to be $144 000 for the month of August.
Pascoe's cash balance on 1 August was $220 000.
Required - Prepare a cash budget for Pascoe for August that includes:
1. expected cash receipts during August
2. expected cash payments during August
3. expected cash balance on 31 August.