Prepare a cash budget for the month of December 2023. Smart Toys Pty Ltd is considering changing
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Smart Toys Pty Ltd is considering changing its depreciation method from straight-line to reducing balance for its warehouse computer system. What will be the effect of any increased depreciation expense on the cash balance?
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Smart Toys Pty Ltd a wholesaler of toy products is in the process of preparing a cash budget for December 2023. The following sales and purchases data have been compiled for the preparation of the budget: Sales Purchases September $ 1,010,000 560,000 October $ 1,020,000 480,000 November $ 1,080,000 540,000 December S 1,000,000 500,000 Additional Information • All sales are on credit. The company collects 70% in the month of sale, 20% in the month following the sale and 10% two months following the sale. • 30% of all purchases are paid for in the following month they are purchased, with the remaining 70% paid for two months following the purchases. • Warehouse equipment costing $174,000 is expected to be acquired and paid for in December. • The company will repay the whole amount of its short-term loan $124,000 in December. • The selling and distribution expenses are $97,000 each month. Administrative expenses are $112,000 per month, included $13,000 of assets depreciation expense. Expenses are paid in the month they are incurred. The cash balance on 1st December 2023 is $23,000. Smart Toys Pty Ltd a wholesaler of toy products is in the process of preparing a cash budget for December 2023. The following sales and purchases data have been compiled for the preparation of the budget: Sales Purchases September $ 1,010,000 560,000 October $ 1,020,000 480,000 November $ 1,080,000 540,000 December S 1,000,000 500,000 Additional Information • All sales are on credit. The company collects 70% in the month of sale, 20% in the month following the sale and 10% two months following the sale. • 30% of all purchases are paid for in the following month they are purchased, with the remaining 70% paid for two months following the purchases. • Warehouse equipment costing $174,000 is expected to be acquired and paid for in December. • The company will repay the whole amount of its short-term loan $124,000 in December. • The selling and distribution expenses are $97,000 each month. Administrative expenses are $112,000 per month, included $13,000 of assets depreciation expense. Expenses are paid in the month they are incurred. The cash balance on 1st December 2023 is $23,000.
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To prepare the cash budget for December 2023 we need to calculate the cash receipts and cash payment... View the full answer
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