The Golden Oranges Nursery, which provides facilities for pre-school children on a commercial basis, is preparing...

 

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The Golden Oranges Nursery, which provides facilities for pre-school children on a commercial basis, is preparing its cash budget for next year. A profile of the estimated revenues and expenses for the first four months of the financial year is as follows: September August € June July Revenue: 64,000 66,000 50,000 68,000 Fees due for payment Costs: 15,000 15,000 34,000 11,000 28,000 15,000 Wages Purchase of Equipment 3,000 3,000 600 1,000 Rent 400 300 500 Electricity Telephone Insurance 1,000 10,000 5,000 800 5,500 4,500 800 5,600 Food & Supplies Depreciation 800 800 The following additional information is available: At the beginning of June, it is estimated that the nursery's bank account will be overdrawn by €4,000 In addition to receipts from Fees, the nursery will receive a loan of €5,000 from one of its owners in July, and sale of unwanted toys and equipment will raise €1,500 cash in August. 70 percent of the Fees are received in the month in which they fall due, the remaining 30 per cent are collected in the following month. This pattern is expected to continue throughout the year. Purchases of Food & Supplies will be paid in the month incurred. The purchase of Equipment is on credit and will be paid for in the month following purchase. All other costs will be paid for in the month incurred. 1. 2. 3. 4. 5. 6. Required: (a) Prepare the Golden Oranges Nursery's cash budget for each of the first three months of the next financial year through to 31" August 20X0. (b) What is the objective of preparing a cash budget? (c) Briefly discuss the benefits and criticisms of budgets. The Golden Oranges Nursery, which provides facilities for pre-school children on a commercial basis, is preparing its cash budget for next year. A profile of the estimated revenues and expenses for the first four months of the financial year is as follows: September August € June July Revenue: 64,000 66,000 50,000 68,000 Fees due for payment Costs: 15,000 15,000 34,000 11,000 28,000 15,000 Wages Purchase of Equipment 3,000 3,000 600 1,000 Rent 400 300 500 Electricity Telephone Insurance 1,000 10,000 5,000 800 5,500 4,500 800 5,600 Food & Supplies Depreciation 800 800 The following additional information is available: At the beginning of June, it is estimated that the nursery's bank account will be overdrawn by €4,000 In addition to receipts from Fees, the nursery will receive a loan of €5,000 from one of its owners in July, and sale of unwanted toys and equipment will raise €1,500 cash in August. 70 percent of the Fees are received in the month in which they fall due, the remaining 30 per cent are collected in the following month. This pattern is expected to continue throughout the year. Purchases of Food & Supplies will be paid in the month incurred. The purchase of Equipment is on credit and will be paid for in the month following purchase. All other costs will be paid for in the month incurred. 1. 2. 3. 4. 5. 6. Required: (a) Prepare the Golden Oranges Nursery's cash budget for each of the first three months of the next financial year through to 31" August 20X0. (b) What is the objective of preparing a cash budget? (c) Briefly discuss the benefits and criticisms of budgets.

Answer rating: 100% (QA)

preparation of cash budget for the month of June Particulars amounts A opening balance 4000 B Revenue fees collected 44800 C costs payments 1 wages 15... View the full answer