's payment terms with e as follows: 10% of ediately goods are the remaining, 6 0% nth 3500
's payment terms with e as follows: 10% of ediately goods are the remaining, 6 0% nth 3500
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 5PA: Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash...
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![Cash budget question
Sir John Ltd, a wooden furniture business is preparing
its cash budget for the three months ending March
2021. It has the following information.
January
February
March
April
GHC
GHC
GHC
GBC
Sales
300,000
400,000
$50,000
550,000
The company's payment terms with
customers are as follows: 10% of
sales immediately goods are
delivered. Of the remaining. 60%
after one month
40% after two months
However, 2% of credit customers never pay in the
wooden furniture industry. This affects cash
received from credit customers who pay after two
months.
Sales for November and December 2020 are
GHS220,000 and GHS290,000 respectively.
3 Labour cost equals 20% of sales, paid weekly
one week in arrears. One week will be
outstanding from December 2020.
Material cost equals 25% of sales. Half of the
materials required for production are purchased
and paid for in the month prior to sale. Suppliers
of materials do not allow credit purchases.
s.Overhead cost equals 15% of sales. Overhead is
paid for in the month in which it is incurred.
The business has planned to purchase a motor
vehicle for GHS15,000 in January and pay over
the three months in three equal instalments.
Depreciation charge for each month is GHS1,000.
At the start of January, the metal box company
have GHS150,000 cash in the current account.
Note: There are four weeks in both January and
February and five weeks in March.
Required:
Prepare the cash budget for the three months period
ending 31 March, 2021.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F36498783-586d-498e-b738-2d2ae841a800%2F3effbf99-edfa-4d6b-ad8a-f71700b70bb5%2Fr7mqt4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Cash budget question
Sir John Ltd, a wooden furniture business is preparing
its cash budget for the three months ending March
2021. It has the following information.
January
February
March
April
GHC
GHC
GHC
GBC
Sales
300,000
400,000
$50,000
550,000
The company's payment terms with
customers are as follows: 10% of
sales immediately goods are
delivered. Of the remaining. 60%
after one month
40% after two months
However, 2% of credit customers never pay in the
wooden furniture industry. This affects cash
received from credit customers who pay after two
months.
Sales for November and December 2020 are
GHS220,000 and GHS290,000 respectively.
3 Labour cost equals 20% of sales, paid weekly
one week in arrears. One week will be
outstanding from December 2020.
Material cost equals 25% of sales. Half of the
materials required for production are purchased
and paid for in the month prior to sale. Suppliers
of materials do not allow credit purchases.
s.Overhead cost equals 15% of sales. Overhead is
paid for in the month in which it is incurred.
The business has planned to purchase a motor
vehicle for GHS15,000 in January and pay over
the three months in three equal instalments.
Depreciation charge for each month is GHS1,000.
At the start of January, the metal box company
have GHS150,000 cash in the current account.
Note: There are four weeks in both January and
February and five weeks in March.
Required:
Prepare the cash budget for the three months period
ending 31 March, 2021.
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