In: Accounting
Management at Caribo Limited were monitoring their cash flow. They requested their accountant to prepare a cash budget for the four months ending 30 April 2016.
Actual Sales |
$ |
November 2015 |
60000 |
December 2015 |
64000 |
Forcast sales: |
|
January 2016 |
65000 |
Feb 2016 |
70000 |
March 2016 |
72500 |
April 2016 |
76250 |
May 2016 |
80000 |
(i) The following sales figures are for the months of November 2015 to June 2016. The figures from January 2016 onward are estimated:
Half the sales are normally paid for in the month in which they occur and the customers are rewarded with a 5% cash discount. The remaining sales are paid for net in the month following the sale.
(ii) Goods are sold at a mark-up of 25% on the goods purchased one month before sale. Half of the purchases are paid for in the month of purchase and a 4% prompt settlement discount is received. The remainder is paid in full in the following month.
(iii) Wages of $12000 per month are paid in the month in which they are earned. It is expected that the wages will be increased by 10% from 1 March 2016.
(iv) Rent will cost $60000 per annum payable three monthly in advance in January, April, July and December each year.
(v) The directors have arranged a bank loan of $60000 which would be credited to company’s current account in February 2016.
(vi) The half-yearly interest on 200000, 8% debentures of $1 each is due to be paid on 15 January 2016.
(vii) The ordinary dividend of $12000 for the year 2015 will be paid in March 2016.
(viii) The bank balance at 31 December 2015 is $12000.
Required: 1) Prepare a cash budget for the four months ended 30 April 2016. Round off to the nearest $.
Please be precise as to how to calculate purhcases (I am very confused as to how this is calculated)