Banner Ltd's budget for the four months from January to April includes the following data. 

1.

2. One third of sales revenue is received one month after sale and the remainder is received two months after sale. The sales in the previous two months were: November $600 000; December $540 000. 

3. One quarter of purchases of materials are paid for in the month of purchase. The remainder are paid for two months later. Purchases in the previous two months were: November $108000; December $106 000.

4. Two thirds of the wages are paid in the month in which they are earned, and the balance is paid in the following month. The wages for the previous December amounted to $30 000. 

5. One half of the overhead expenditure is paid in the month in which it is incurred, and the balance is paid in the following month. The overheads for the previous December were $380 000. 

6. Old machinery will be sold for $4000 in April. New machinery will be purchased in March for $90 000 but only one half of the price will be paid in that month. The balance will be paid in August. 

7. Banner Ltd has an overdraft $63 000 at the bank at 31 December.

Required 

(a) Prepare Banner Ltd's cash budget for each of the four months from January to April. The budget should be prepared in columnar form. 

(b) Prepare a statement to show the accruals in part (a) which would appear in a Balance Sheet at 30 April.

Transcribed Image Text:

Month January February March April Sales Materials $000 $000 615 114.4 636 690 684 118.8 132.0 128.0 Wages $000 30 33 36 39 Overheads $000 360 390 412 420