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...
-
Discuss the problems of trading off exploration and pilot testing under tight budgetary constraints. What are the immediate and long-term effects?
-
Use the first thirteen rules of inference to derive the conclusions of the following symbolized arguments: 1. HD A 2. A /~(Hv~A)
-
What is the core approach to an anthropology of art?
-
On January 1, 2011, Nathan Company received a 5-year, $5,000,000 loan, with interest payments occurring at the end of each year and the principal to be repaid on December 31, 2015. The interest rate...
-
What is the corporate level strategy of Lyft ( choose between one of those: value-creating, value-neutral or value-reducing) No definition just choose the strategy among those and explain why?
-
Calculate the following variances and indicate whether each variance is favorable or unfavorable: 1. Volume Variance 2. Total Variance Expected Treatments= 1,000 Standard Cost Profile Lab Treatment...
-
Suppose a vendor sells seat tickets and floor tickets to a concert. She would like to determine the price she should charge for each ticket type to meet her needs. She can admit 500 people on the...
-
Outline ways in which a health and safety practitioner could evaluate and develop his own practice.
-
Ricardo is preparing to deliver a concise summary of a proposal to senior management later in the week. What kind of type of business presentation called?
-
In a large organizations with many businesses, a marketing plan with marketing objectives to increase sales and marketing share is usually done at what level? Explain.
-
You are required to size a shell and tube heat exchanger to cool 100,000 kg/hr of n-heptane at a pressure of 2 bar.g from 95C to 40C before specifying the tube sheet thickness using PD5500. All parts...
-
Create a heatmap with values ( just run the R codes will get it ) . Calculate the minimum, maximum, medium, standard deviation of ALL the correlations, except those correlations which are equal to 1...
-
A wage subsidy has been proposed as the best way to increase the incomes of the working poor. the subsidy would involve government topping up the hourly wage rate of the individual who has been...
-
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...
-
An orthotropic AS/3501 carbon/epoxy lamina (see Tables 2.2 and 4.1) is subjected to the plane stress condition \(\sigma_{x}=1000 \mathrm{MPa}, \sigma_{y}=50 \mathrm{MPa}\), and \(\tau_{x y}=50...
-
Determine the longitudinal tensile strength of the hybrid carbon/aramid/ epoxy composite described in Problem 3.4 and Figure 3.10 of Chapter 3 if the fiber packing array is square with the closest...
-
Compare and discuss the estimated longitudinal compressive strengths of Scotchply 1002 E-glass/epoxy based on (a) fiber microbuckling and (b) transverse tensile rupture. Assume linear elastic...
Study smarter with the SolutionInn App