Reference no: EM132527955
AWCummins is one of Australia's largest retail outlets and has decided to prepare cash budget for the quarter ended 31 March 2020.
As at 1 January 2020, the Cash at bank ledger account will have a debit balance of $50,000. The following estimates have been made for the next three months:
January February March
Sales. $200,000 $300,000. $350,000
Cash purchases $150,000 $225,000 $250,000
Cash wages $40,000 $50,000. $52,500
Depreciation of plant $10,000 $10,000. $10,000
Rental expenses $25,000 $25,000 $25,000
Insurance expenses $750. $750 $750
Loan repayment $1,000. $1,000. $0
All sales are on credit. It is expected that debtors will pay their accounts as follows:
- 60 per cent in the month following the sale.
- 30 per cent in the second month following the sale.
- 10 per cent in the third month following the sale.
Actual sales for the previous three months were as follows:
- $350,000 in December 2019
- $275,000 in November 2019
- $300,000 in October 2019
- Rental expenses and insurance expenses are paid the following month after they are incurred.
- December expenses were as follows: Rental expense: $9,000 and insurance expense $700.
REQUIRED:
Question 1: Prepare schedule of cash receipts from debtors for the Quarter ending 31 st March 2020.
Question 2: Prepare cash budget for the Quarter ending 31 st March 2020.