Question 1 (40 Marks) Wamboto Ltd specializes in the importation and sales of equipment for children's...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 1 (40 Marks) Wamboto Ltd specializes in the importation and sales of equipment for children's indoor play centers. The company was set up by Mr. Sintentu. Mr Sintentu has asked you to assist him managing his cash balance over the next three months. You have been provided with the following information: 1. The balance on 1 February 2019 is forecast at N$ 120 000. 2. Sales for November and December are N$ 130 000 per month. They are expected to rise to N$ 150 000 in January 2009, N$ 170 000 in February 2019 and N$ 190 000 in March 2019. They will then fall to N$ 140 000 for each for each of the following six months. This is due to downturn in demand. 3. All sales are made on credit, 2% of debtors do not pay at all, 70% pay one month after sales and the remaining 28% pay two months after sales. 4. Purchases are made as follows: N$ 60 000 November, N$ 40 000 December, N$ 60 000 January, N$ 50 000 February, N$ 70 000 March, N$ 90 000 April, and NS 35 000 on May. All purchases are paid for in two months after purchases. 5. The cost of employing Wamboto Ltd's permanent staff is N$ 40 000 per month. Wamboto Ltd also employs temporary staff during January, February and March at additional cost equaling to 3% of sales each month. 6. Wamboto Ltd uses a courier to dispatch the equipment to its customers. The cost of this service is 2% of sales value in January to March, falling to 1% per month thereafter. 7. The company charges depreciation of N$ 15 000 each month. 8. Wamboto Ltd also owns two indoor play centers that it rents out at the rate of N$ 3 500 each per month from January to April, falling to N$ 3 000 per month thereafter. All rent is received one month in advance. 9. Administration costs are forecast at N$ 30 000 each month after deducting depreciation. Required: a) Prepare a monthly cash budget for 1 January to 30 March 2019, showing clearly any necessary workings. (40 marks) Unless told otherwise, assume that payments are made in the month in which the costs are incurred. Question 1 (40 Marks) Wamboto Ltd specializes in the importation and sales of equipment for children's indoor play centers. The company was set up by Mr. Sintentu. Mr Sintentu has asked you to assist him managing his cash balance over the next three months. You have been provided with the following information: 1. The balance on 1 February 2019 is forecast at N$ 120 000. 2. Sales for November and December are N$ 130 000 per month. They are expected to rise to N$ 150 000 in January 2009, N$ 170 000 in February 2019 and N$ 190 000 in March 2019. They will then fall to N$ 140 000 for each for each of the following six months. This is due to downturn in demand. 3. All sales are made on credit, 2% of debtors do not pay at all, 70% pay one month after sales and the remaining 28% pay two months after sales. 4. Purchases are made as follows: N$ 60 000 November, N$ 40 000 December, N$ 60 000 January, N$ 50 000 February, N$ 70 000 March, N$ 90 000 April, and NS 35 000 on May. All purchases are paid for in two months after purchases. 5. The cost of employing Wamboto Ltd's permanent staff is N$ 40 000 per month. Wamboto Ltd also employs temporary staff during January, February and March at additional cost equaling to 3% of sales each month. 6. Wamboto Ltd uses a courier to dispatch the equipment to its customers. The cost of this service is 2% of sales value in January to March, falling to 1% per month thereafter. 7. The company charges depreciation of N$ 15 000 each month. 8. Wamboto Ltd also owns two indoor play centers that it rents out at the rate of N$ 3 500 each per month from January to April, falling to N$ 3 000 per month thereafter. All rent is received one month in advance. 9. Administration costs are forecast at N$ 30 000 each month after deducting depreciation. Required: a) Prepare a monthly cash budget for 1 January to 30 March 2019, showing clearly any necessary workings. (40 marks) Unless told otherwise, assume that payments are made in the month in which the costs are incurred.
Expert Answer:
Answer rating: 100% (QA)
Sales Purchases Collection of receivables 70 pay one month after sales Remaining 28 pay two months a... View the full answer
Related Book For
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley
Posted Date:
Students also viewed these accounting questions
-
You have been provided with the following information about two companies: Required: a. Calculate the current ratio for each company and the amount of working capital each company has. b. Which...
-
You have been provided with the following information from the balance sheets and income statements of Batchawana Inc. (Batchawana). Accounts payable and inventory are from the balance sheet as of...
-
You have been provided with the following information about Everell Inc. (Everell). Required: a. Calculate the accounts receivable, inventory, and accounts payable turnover ratios for 2016 through...
-
ABC Insurance Company has issued a commercial package policy to the Henderson Company. ABC recently discovered that company executives misrepresented important information about the business to...
-
Metzger Company completed its first year of operations on December 31, 2014. Its initial income statement showed that Metzger had sales revenue of $198,000 and operating expenses of $83,000. Accounts...
-
Discuss how place, time, possession, and communication utilities can be created for each of the following:
-
Loris Catering, Inc., purchased $400 of supplies on account. The journal entry to record this transaction is denoted by which of the following? DATE ACCOUNTS POST REF. DR. CR. a. Inventory 400...
-
Shen and Smith [Ind. Eng. Chem. Fundam., 7, 100-105 (1968)] measured equilibrium-adsorption isotherms at four different temperatures for pure benzene vapor on silica gel, having the following...
-
2. The financial statements of ABC Limited are given below. ABC Limited Income Statement For the year ended December 31, 2010 Revenues and Gains Rupees Sales Revenue 35,000,000.00 Interest Income...
-
1. Which process should VBB choose to produce?? 2. How much would VBP be willing to pay for the testing that is currently offered, for each batch?? 3. Would we be considered a perfect test, at twice...
-
Venus has about 4/5 the mass of the Earth and has an orbital radius around the Sun about 5/7 of Earths. Which gives the relationship of the gravitational attraction between Venus and the Sun (FV) to...
-
Explain The neoclassical (Solow) growth model, Critically assess the extent to facilitate our understanding of the process of technological change and its contribution to economic growth and...
-
Interest rate for an annuity Personal Finance Problem Anna Waldheim was seriously injured in an industrial accident. She sued the responsible parties and was awarded a judgment of $4,000,000. Today,...
-
a) Canada announces that it will be eliminating tariffs on foreign goods one year from now, what will happen to the value of the Canadian dollar? Explain. b) Suppose the governor of the Bank of...
-
In Fiona's product workshop, a particular job, known as VT17, consumed 6,900 of materials, and incurred 60 hours of direct labour during March 20X2. The relevant total production data during March...
-
10 Q.4 Q.3 The cruise ship must provide some sort of security for its travelers and employees. Devise a plan as to how you will ensure guest safety and security in the following areas of the cruise...
-
Written Portion Specifications - Use headers for each of the numbered sections below. 1. Company summary and salesperson role must include: a. A description of the company's goods and/or services...
-
Activator rod AB exerts on crank BCD a force P directed along line AB. Knowing that P must have a 100-N component perpendicular to arm BC of the crank, determine (a) The magnitude of the force P, (b)...
-
It is less common to confirm accounts payable at an interim date than accounts receivable. Explain why.
-
Distinguish between a sampling error and a nonsampling error. How can each be reduced?
-
What three types of authorizations are commonly used as internal controls for sales? For each authorization, state a substantive test that the auditor could use to verify whether the control was...
-
Eastern Bank serves both university students and regular customers. For university students, the bank charges \($0.10\) per withdrawal. Regular customers get free withdrawal services. The bank earns...
-
After an extensive cost-benefit analysis, Mercy General Hospital has made a decision to outsource its ambulance operations to a private company. The administration has narrowed down its decision to...
-
The Peter Paint Company makes water- and oil-based paints for houses. Recently, the firm has been investigating other opportunities. One possibility is producing finger paints for children. Finger...
Study smarter with the SolutionInn App