Prepare a cash budget, Financial Accounting

Assignment Help:

Prepare a cash budget

The following information appeared on the balance sheet of XYZ Ltd at 30 June 2012:

                             Accounts receivable                                         80 000

                            Bank overdraft                                                 12 000

                            Accounts payable                                              100 000

                            Provision for income tax (payable in July)            10 000

                            Provision for dividends (payable in August)          20 000

                            Prepaid rent                                                       2 000

 

Estimated sales and purchases figures for July and August are as follows:

                                                   July                                     August

                            Sales               200 000                              150 000

                            Purchases        124 000                                96 000

 

Cash sales usually represent 50% of total sales, with 25% of credit sales collected in the same month as the sale, and the remainder in the following month.  Bad debts are so small that they can be ignored.

The company purchases inventory on credit, with all payments made in the month after purchase.

Other information:

  1. A new shareholder has been invited to join the company and will make a capital contribution of $50 000 in July.
  2. The company is planning to pay cash for new equipment costing $45 000 on 31 August. Depreciation expense is $1 000 per month until that purchase.
  3. The company rents its premises. The annual rental payment, due at the end of August, has not changed for a number of years.
  4. The only other expenses of XYZ Ltd, apart from the ones already noted, are freight and salaries. These expenses are paid as incurred. Freight is a variable expense, being 5% of sales for the month. Salaries are fixed at $6 000 per month.

Required

Prepare a cash budget for the months of July and August 2012 (you are not required to show a total column for the two month period).


Related Discussions:- Prepare a cash budget

Receiver necessary statement-bankruptcy, Receiver necessary statement T...

Receiver necessary statement The receiver may, if necessary, require the statement to be submitted by: Past or present officers of the company Persons who have taken

Accounting date-trusts accounts-trusts laws and accounts, Accounting Date ...

Accounting Date In determining the accounting date of the trust, the trustees will consider the following: Date of death (accounts to anniversary of death); Fiscal y

Explain methods of calculating depreciation, The financial year of Jack and...

The financial year of Jack and Jill Ltd will end on 31 May 2008. At 1 June 2007, the company had in use equipment with a total accumulated cost of Rs 135,620 which had been depreci

Research and development, Research and Development (R&D) - Research is a pl...

Research and Development (R&D) - Research is a planned activity aimed at discovery of new knowledge with hope of developing new or improved services andproducts. Development is the

Grants are not necessarily recognized as revenue, Grants are not necessaril...

Grants are not necessarily recognized as revenue when they are awarded. Columbus City was awarded a state reimbursement grant of $150,000 to assist its adult literacy program. The

What is the price of an asset paying, Suppose the interest rate for a one-p...

Suppose the interest rate for a one-period bond is 4% between the current period and the next. Then the rate becomes 5% for ever. (a) What is the price of an asset paying (1,1,1

Prepare general journal entries, Assessment Criteria: Student work will ...

Assessment Criteria: Student work will generally be assessed in terms of the following criteria: 1. Preparation of correct journal entries. 2. Accumulation of journal entr

Find the price of a treasury bond , The time t= 0 continuously compounded...

The time t= 0 continuously compounded term structure of interest rates is given by R(0 , T) = 0. 05 - 0. 005 e - 0.10 T . Find the price of a Treasury bond with exactly 3

Calculate marginal tax rate, Rogers Communication is considering whether to...

Rogers Communication is considering whether to take advantage of historically low Canadian interest rates and lower its cost of debt by refunding its old bonds. Rogers has a $50mil

Errors-financial period, Errors An error is an error discovered in the cu...

Errors An error is an error discovered in the current financial period but it relates to one or more previous financial periods. Such errors arise due to mathematical mistakes, m

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd