The following are the account balances for Nguyen Ltd as at 31^st December 2018

 

Mortgage	$  210,000.00	Inventory	$    60,000.00
Owners Equity	$  360,000.00	Investments (Shares)	$    11,000.00
Plant (net)	$    61,000.00	Land and Building	$  327,629.00
Accounts Payable	$    31,000.00	Cash at Bank	$      5,000.00
Accounts Receivable	$  136,371.00

Nguyen Ltd wants budgets prepared for the next six months. The expected credit sales for the six months ending 30^th June 2019 (there are no cash sales) are as follows:

Estimated Sales (units)	Jan	Feb	March	April	May	June	July
Assuming poor Market	15,000.00	10,000.00	8,000.00	7,000.00	10,000.00	10,000.00	10,000.00

Accounts Receivable are collected in the following pattern:

• 60% of accounts are settled in the first month following the month of sale
• 3% discount will be available to 25% of those paying within the first month following the month of sale
• 39$ of accounts are settled in the second month following the month of sale
• 1% are bad debts

The accounts receivable balance as at December 31, 2018 included the December sales ($80,500) and the accounts receivable brought forward from the November sales of $146,250. Cost estimates and revenues are details below:

	$ per unit		$ per unit
Selling price	10	Advertising	2,500
Inventory (Purchases)	8	Administration	2,100
Variable selling expenses	0.75	Depreciation (Plant)	1,500
		Interest Payments	4,100

In addition, dividends of $400 are expected to be received in May 2013, from investments. The sale of an investment in June 2019 should result in proceeds of $12,100.

All expenses are paid for when incurred except for purchases of inventory, 60% of which are paid for in the month of purchase and the balance in the following month. Closing balance of inventory are to be kept at 50% of the following months sale (units). During this period no purchases or sale of plant or property is anticipated.

Develop the following budgets of Nguyen Pty Ltd using the information provided in the case study:

• Budgeted Income statement for the six months ending 30 June 2013, showing net profit assuming poor market conditions
• Monthly cash budget for the six month period January – June 2013, assuming poor market conditions
• Budgeted balance sheet as at 30 June 2013 assuming poor market conditions.

Submit your completed budgets with this assessment.

Answer rating: 100% (QA)

Budgeted Income Statement for the Six Months Ending 30 June 2019 Showing Net Profit Assuming Poor Market Conditions Revenues Sales 15000000 Less Cost of Goods Sold 12000000 Gross Profit 3000000 Operat... View the full answer