Prepare a cash budget for each of the first three months, Financial Accounting

Assignment Help:

Question :

The subsequent data pertain to a shop. The owner has made following sales forecasts for the first 5 months of the coming year.
                                                       £.
January                                       40,000
February                                     45,000
March                                          55,000
April                                             60,000
May                                             50,000

Other data are as follows:

(a) Debtors and creditors' balances at the beginning of the year are £ 30,000 and £14,000 respectively. The balances of other relevant assets and liabilities are:
                                                       £.
Cash balance                              7,500
Stock                                          51,000
Accrued sales commission           3,500

(b) 40% sales are on cash basis. Credit sales are collected in the following month of sale.

(c) Cost of sales is 60% of sales.

(d) The only other variable cost is a 5% commission to sales agents. Sales commission is paid in the month after it is earned, i.e.,time-lag is one month.

(e) Inventory is kept equal to sales needs for the next two months' budgeted sales.

(f) Trade creditors are paid in the subsequent month after purchases.

(g) Fixed costs are £ 5,000 per month, including £ 2,000 depreciation.

Required:

Prepare a cash budget for each of the first three months of the coming year.


Related Discussions:- Prepare a cash budget for each of the first three months

What is the turnover needed to earn, a company recorded for the past year a...

a company recorded for the past year a sales of 500,000 and an operating incme of 40,000. What is the turnover needed to earn in order to achieve an ROI of 20%

Calculate the total capital, The current balance sheet of CBKH shows $800 m...

The current balance sheet of CBKH shows $800 million of corporate loans ($500 million of which being rated AA- and the remaining rated BBB+), $200 million of bonds issued by an OEC

Determine income statement , Mr. Wong currently running a small manufactur...

Mr. Wong currently running a small manufacturing business.  The Trial Balance of the business at 31 March 2011 is as follows:

Mutual dealings-bankruptcy and liquidation, MUTUAL DEALINGS A right of ...

MUTUAL DEALINGS A right of set-off is allowed where there have been - (a) Mutual credits, debts or other dealings resulting in pecuniary liabilities, (b) Between the debtor an

Compute debt equity ratio and prepare a cash flow statement, 1.From the ...

1.From the following information you are required to prepare a cash Flow statement of XYZ Ltd for the year ended 31 st December 2009 LIABILITIES

Rental loss, Jane makes a living renting expensive state of the art surveil...

Jane makes a living renting expensive state of the art surveillance equipment to detectives and nervous spouses. Her average rental period is 27 days. The rental price includes all

Help, I need help with my homework

I need help with my homework

Us gaap, US GAAP follows the Historical Cost Concept in valuing the cost of...

US GAAP follows the Historical Cost Concept in valuing the cost of Long-Term Assets. Explain this principle and how it compares to the standards used in the reporting of Long-Term

Prepare a cash budget, Prepare a cash budget The following information...

Prepare a cash budget The following information appeared on the balance sheet of XYZ Ltd at 30 June 2012:                              Accounts receivable

Calculate the loss suffered by the shareholders, In June 2004, Feltex Carpe...

In June 2004, Feltex Carpets Limited raised NZ $254 million in an initial public offering. Twenty seven months later the company was in receivership, its share price having collaps

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