Reference no: EM132469208

Question 1: a) Underline the main components which are considered while preparing a budget in a Company. What are the major considerations business owners should make as they budget and forecast ?

Question 1: b) Prepare Cash budget for the Quarter April To June based on the following data and additional information.

Month                Sales($)                     Purchase($)                   Wages($)              Overheads($)

Jan                     60,000                      36,000                      9,000                 10,000

Feb                    62,000                       38,000                       8,000                 9,500

Mar                     64,000                        33,000                      10,000                 11,500

Apr                     58,000                          35,000                     8,500                    9,000

May                   56,000                             39,000                      9,000                  9,500

Jun                     60,000                            34,000                      8,000                9,000

Additional Information :

1. Cash balance at 1st April is $800,000

2. Sales is 40% cash sales and 60% is collected in the following month.

3. All purchases of a month are paid after 2 months.

4. Land was purchased in April for $85,000

5. Wages of a month are paid the following month. All overheads are paid the same month.

6. Loan repaid in May $16,000

7. Dividend of $75,000 is expected to be received in May.