Complete cash budget: - Budget Preparation Cheap Phones Ltd Cheap Phones Ltd supplies mobile phones to
Question:
Complete cash budget:
- Budget Preparation – Cheap Phones Ltd
Cheap Phones Ltd supplies mobile phones to its customers. You have been given the following information.
Budgeted sales: 1,600 units November; 1,700 units December: 1,650 units January
Sales value $200 a unit
Collections:
65% in the month of sale,
30% month following,
5% not collectible
The cost of goods sold is 50% of sales
Ending merchandise inventory is to equal 25% of the following month’s cost of goods sold Goods are paid for in the month following purchase
Other monthly expenses paid for in cash are $17,000
Monthly depreciation is $6,000
Ignore taxes
A minimum cash balance of $135,000 is to be maintained and interest on any borrowings is 4% per month
Any unrecoverable sales amounts are to be carried forward in Accounts Receivable until they can be written off officially at year-end.
Statement of Financial Position October 31 20x2
Assets.
Cash $42,000
Accounts receivable (net of uncollectible amounts) Inventory. $16,000
Inventory $30,000
Property, plant, and equipment (net of accumulated depreciation). $125,000
Total assets. $213,000
Liabilities and Equity Accounts payable. $12,000
Issued capital. $157,000
Retained earnings. $44,000
Total liabilities and stockholders’ equity. $213,000
1.Prepare a Sales Budget for November and December
2.Prepare a Purchases Budget for November and December
3.Prepare a Cash Budget for November and December
4.Prepare the Budgeted Income Statement for November and December
5.Prepare a Budgeted Balance sheet for the end of December
There is no separate Selling and Admin budget required, but any figures that would be required for this will still be included within the Cash Budget, Income Statement, and Balance sheet where applicable.
Foundations in Microbiology
ISBN: 978-0073375298
8th edition
Authors: Kathleen Park Talaro, Barry Chess