Consider Remy Company's income statement budget for the month ending Dec 30, 2022 as follows: Sales...
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Consider Remy Company's income statement budget for the month ending Dec 30, 2022 as follows: Sales Minus: Cost of goods sold Stock, (31 May 2021) Purchase Stock for sale Ending Stock Gross profit Minus: Operating expenses Salary Utilities Advertising Depreciation Office shopping Insurance Profit before tax RM 50,000 192,000 242,000 (40,000) 36,000 5,000 10,000 1,000 4,000 3,000 RM 290,000 202,000 80,000 (59,000) 29,000 Additional information: 1. Cash balance on 30 Nov 2022 is RM15,000 2. Sales revenue is 80% in the current month, 10% the following month and another 10% in the third month. 3. Accounts receivable balance (ABT) on 30 Nov 2022 amounts to RM44,000, this amount includes sales in Oct 2022 of RM20,000 and Nov 2022 of RM24,000. 4. Accounts payable balance (ABB) on 30 Nov 2022 amounts to RM145,000. 5. The company pays 25% of the purchase in the month of purchase and the balance in the following month. 6. All operating expenses are paid in the current month except insurance which is paid once a year in December every year. Required: a) Prepare a cash budget for the month of December 2022 using the above information. b) Briefly explain THREE (3) importance of cash budget and how it relates to organizational strategy. Consider Remy Company's income statement budget for the month ending Dec 30, 2022 as follows: Sales Minus: Cost of goods sold Stock, (31 May 2021) Purchase Stock for sale Ending Stock Gross profit Minus: Operating expenses Salary Utilities Advertising Depreciation Office shopping Insurance Profit before tax RM 50,000 192,000 242,000 (40,000) 36,000 5,000 10,000 1,000 4,000 3,000 RM 290,000 202,000 80,000 (59,000) 29,000 Additional information: 1. Cash balance on 30 Nov 2022 is RM15,000 2. Sales revenue is 80% in the current month, 10% the following month and another 10% in the third month. 3. Accounts receivable balance (ABT) on 30 Nov 2022 amounts to RM44,000, this amount includes sales in Oct 2022 of RM20,000 and Nov 2022 of RM24,000. 4. Accounts payable balance (ABB) on 30 Nov 2022 amounts to RM145,000. 5. The company pays 25% of the purchase in the month of purchase and the balance in the following month. 6. All operating expenses are paid in the current month except insurance which is paid once a year in December every year. Required: a) Prepare a cash budget for the month of December 2022 using the above information. b) Briefly explain THREE (3) importance of cash budget and how it relates to organizational strategy.
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Answer rating: 100% (QA)
a To prepare a cash budget for the month of December 2022 we need to consider the cash inflows and cash outflows based on the given information Heres the stepbystep calculation 1 Cash Inflows Sales Re... View the full answer
Related Book For
Corporate Financial Accounting
ISBN: 978-1285868783
13th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
Posted Date:
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