Question

1. Alpha Ltd has appointed you as a manager in the budgeting department. The company has...

1. Alpha Ltd has appointed you as a manager in the budgeting department. The company has provided the following information to prepare a cash flow budget for the six months from the 1 January 2021 to 30 June 2021.

  1. Alpha Ltd produces only one type of product and the projected selling price of the product is £2 for January and February and after that will be fixed at £3 for the foreseeable future.    
  2. For the first three months of the year, 2,000 units will be sold per month. For the following three months, 2,500 units will be sold per month. Sales income is to be received in the month of sale.
  3. Insurance costs are £200 every two months. The company will pay for insurance on 1 December 2020.
  4. The company is paying 20% of sales of each month as bonus to the employees in the following month. The total sales during December 2020 will be £5,000.
  5. Alpha Ltd will pay overhead costs of £2,000 each month.
  6. The opening cash balance at 1 January 2021 will be £1,000.
  7. The monthly cost of direct material and direct labour is estimated to be £500 and the company will pay them during each month.
  8. Fixed costs of production are £100 per month, payable in the month.

Required:

1. Prepare a cash flow budget for the period 1 January 2021 to 30 June 2021 and indicate the closing balance as at 30 June 2021.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SOLUTION

CASH FLOW BUDGET FROM JANUARY TO JUNE

PARTICULARS JAN FEB MARCH APRIL

MAY

 JUNE
OP. CASH (A) 1000 3400 5800 11900 17100 22500
RECIEPTS

SALE(UNITS *SALES PRICE

4000

 4000 7500 7500 7500 7500
TOTAL RECEIETS (B) 4000 4000 7500 7500 7500 7500

PAYMENTS(C)
INSURANCE ( PAID AFTER TWO MONTHS ) 200 200 200
BONUS 20% OF PREVIOUS MONTH SALE 1000 800 800 1500 1500 1500
DIRECT MATERIAL AND LABOUR AND F.C 600 600 600 600 600 600

CLOSING CASH

A+B-C

 3400 5800 11900 17100 22500 27700
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data...
On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020. Prepare production and direct materials budgets by quarters for 6 months. Sales units: First quarter 5,000; second quarter 6,000; third quarter 7,000. Ending raw materials inventory: 40% of the next quarter's production requirements. Ending finished goods inventory: 25% of the next quarter's expected sales units. Third-quarter production: 7,200 units. The ending raw materials and finished goods...
On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data...
On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020. Sales units: First quarter 5,400; second quarter 7,000; third quarter 7,600. Ending raw materials inventory: 40% of the next quarter’s production requirements. Ending finished goods inventory: 25% of the next quarter’s expected sales units. Third-quarter production: 7,840 units. The ending raw materials and finished goods inventories at December 31, 2019, follow the same percentage relationships to...
Danner Company expects to have a cash balance of $45,000 on January 1, 2020. Relevant monthly...
Danner Company expects to have a cash balance of $45,000 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows. Prepare a cash budget for 2 months. Collections from customers: January $85,000, February $150,000. Payments for direct materials: January $50,000, February $75,000. Direct labor: January $30,000, February $45,000.Wages are paid in the month they are incurred. Manufacturing overhead: January $21,000, February $25,000. These costs include depreciation of $1,500 per month. All other...
Assignment: Operating Budgeting The following data pertains to XY Company Budgeted sales for January 201X                         
Assignment: Operating Budgeting The following data pertains to XY Company Budgeted sales for January 201X                                               $200,000 The estimated increase in sales for the coming months                                   2% Beginning inventory                                                                             20%      of CGS Cost of goods sold (variable)                                                               60%      of Sales Other variable expenses                                                                        10%      of Sales Depreciation per month                                                                    10,000 Other fixed costs                                                                               20,000 Assume the following data for last December Cash                                                                                                      2,000 Accounts Receivable                                                                       100,000 Long-term-assets (net)                                                                1,000,000 Accounts payable                                                                              80,000 Long-term-debt                                                                               300,000 Other information: Sales are collected as follows...
Exercise 23-6 On January 1, 2017, the Hardin Company budget committee has reached agreement on the...
Exercise 23-6 On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017. Sales units: First quarter 5,300; second quarter 6,000; third quarter 7,800 Ending raw materials inventory: 40% of the next quarter’s production requirements Ending finished goods inventory: 25% of the next quarter’s expected sales units Third-quarter production: 7,360 units. The ending raw materials and finished goods inventories at December 31, 2016, follow the same percentage...
Question 2 Smith Ltd manufactures and sells one product. You are presented with the following information...
Question 2 Smith Ltd manufactures and sells one product. You are presented with the following information for the preparation of the annual operating budget for the period ending 31 December 2021: Estimated sales in units are 50,000 units for Quarter 1, 53,000 units for Quarter 2, 62,000 units for Quarter 3, and 65,000 units for Quarter 4. The estimated per unit selling price is $9 for Quarters 1-3, and $10 for Quarter 4. Smith Ltd has set the desired ending...
Drake Ltd. provides engineering consulting services to various clients. The company’s year-end is December 31 and...
Drake Ltd. provides engineering consulting services to various clients. The company’s year-end is December 31 and adjusting entries are only prepared at year-end, on December 31. For each of the following situations, prepare the necessary adjusting entries on December 31, 2020. If no entry is required, clearly indicate by writing “No Entry”. On January 1, 2020, Drake Ltd had a balance in the Prepaid Insurance account in the amount of $3,600 representing 9 months insurance (up to September 30, 2020)....
Danner Company expects to have a cash balance of $46,800 on January 1, 2020. Relevant monthly...
Danner Company expects to have a cash balance of $46,800 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows. Collections from customers: January $88,400, February $156,000. Payments for direct materials: January $52,000, February $78,000. Direct labor: January $31,200, February $46,800. Wages are paid in the month they are incurred. Manufacturing overhead: January $21,840, February $26,000. These costs include depreciation of $1,560 per month. All other overhead costs are paid as incurred....
Halloween Pty Ltd is preparing a cash budget for the first three months of 2016. Relevant...
Halloween Pty Ltd is preparing a cash budget for the first three months of 2016. Relevant estimates for the budget are as follow: January February March Sales 260,000 300,000 350,000 Materials Purchases 150,000 185,000 220,000 Salaries and Wages 30,000 30,000 35,000 Selling Expenses 14,500 19,000 22,000 Administration Expenses 20,500 24,800 27,600 Additional information: ? All sales are on credit. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20%...
Spring 2020 Spreadsheet Project Name: Lexie's Wool Sweaters Projected Budgeting Data Sales & Collections October 2020...
Spring 2020 Spreadsheet Project Name: Lexie's Wool Sweaters Projected Budgeting Data Sales & Collections October 2020 November 2020 December 2020 January 2021 February 2021 Sales in Units (Sweaters) 30,000 34,000 55,000 47,000 32,000 Selling Price per Sweater $          100.00 Cash Sales Collected in the Month of Sale 30% Credit Sales Collected in the Month of Sale 50% Credit Sales Collected in the Following Month 20% Ending FG Inventory Requirement 3% of next months unit sweater sales Ending FG Inventory, September...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT