Question

1. An Enterprises has the following business transaction estimates relating to the final quarter of 2020.

     $                      $                       $

                                                            October            November           December

  

Credit Sales                                              105600                112000                138000               

        

Cash Sales                                                21200                 26420            31200                

        

Receipts from Accounts Receivable `1.   calculate           calculate           calculate         

Wages                                                        28200                 28200                   28200          

Office Furniture                                           6000                  7800                           0

Prepayments                                                             0                          0                     5275

Administrative Expense                             10000                 10000                   11900

Depreciation on Office Furniture                  2500                   2500                     2500

Receipt of Loan                                                  0              100000                        0

Credit Purchases                                              42000                 42000                   58000                 

Payments of Accounts Payable 2.           calculate         calculate             calculate

Accrued Expenses                                               0                          0                     6700         

               

Notes

1.Actual Receipts (money in) from Accounts Receivable are 70% of the previous

months Credit Sales and the balance of 30% owing is received in the following

month. For example if we had Credit Sales of $100000 in January we would

expect to receive 70% of that $100000 in February and the balance (30%) in

March.

Credit Sales for September 2020 were $80,000 as they were in August 2020.

Cash Sales were $16,500 in August 2020 and $18,000 in September of 2020.

2. Payment of Accounts Payable is paid 60% of purchases in the month of

    purchase and the remaining 40% in the month following. Purchases in

    September 2020 were $36,000.

3. The cash balance at 1 October 2020 was $52,890

Required

Prepare a cash budget month by month for the quarter ending 31 December 2020.

Note that marks will be deducted for each incorrect posting to the cash budget.  

Answer 1

Solution

	Cash Budget
	for quarter ending 31 dec 2020
		Oct	Nov	Dec	Quarter
A	Beginning Cash balance	52,890	70,290	206,630	52,890
	Cash Recepits:
	Receipts from customers ( WN 1)	101,200	124,340	141,280	366,820
	Receipt of Loan	-	100,000	-	100,000
B	Total Cash Receipts	101,200	224,340	141,280	466,820
	Cash Payments:
	Payment to Customers ( WN 2)	39,600	42,000	51,600	133,200
	Wages	28,200	28,200	28,200	84,600
	Office Furniture	6,000	7,800	-	13,800
	Prepayments	-	-	5,275	5,275
	Administrative Expense	10,000	10,000	11,900	31,900
C	Total Cash Payments	83,800	88,000	96,975	268,775
D	Surplus /( Deficit ) Cash ( B - C )	17,400	136,340	44,305	198,045
E	Closing Cash Balance ( A + D )	70,290	206,630	250,935	250,935

Working notes:

1.

Budgeted Cash Receipts from Customer
	Oct	Nov	Dec
Cash Sales	21,200	26,420	31,200
Collection of credit Sales :
August	24,000
September	56,000	24,000
October		73,920	31,680
November			78,400
Total Budgeted cash Receipt from Customers	101,200	124,340	141,280

2.

Budgeted Cash Payments to Suppliers
	Oct	Nov	Dec
Payment for credit purchases for :
September	14,400
October	25,200	16,800	-
November		25,200	16,800
December			34,800
Total Budgeted cash Payments to suppliers	39,600	42,000	51,600

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