Question 1(b) Cash budget Timone Limited, a beer wholesaling company has the following budgeted information: Month...

Transcribed Image Text:

Question 1(b) Cash budget Timone Limited, a beer wholesaling company has the following budgeted information: Month Sales values Purchases Operating costs (before trade discount) GH¢ GH¢ 800,000 GH¢ May 960,000 1,020,000 115,000 110,000 120,000 130,000 125,000 June 600,000 July August September 810,000 1,200,000 1,410,000 900,000 1,100,000 700,000 Additional information: (a) 20% of sales are cash terms and cash customers enjoy a 5% trade discount based on the selling price. The remaining sales are on credit tems, 70% of which are collected in the month following sale and 30% of which are collected in the second month following sale. (b) Timone Limited sets its selling price on a uniform mark up of 50% of the cost of goods sold for both cash and credit sales. (c) All purchases are bought on credit and paid in the following month after purchase. (d) Timone Limited will buy a new meat cutting machine at a cash price of GH¢300,000 on 1 August. The old meat cutting machine, with a cost and carrying amount of GH¢210,000 and GH¢ 156,000 as at 1 August, will be traded in against the new machine at a trade-in allowance of GH¢120,000. At all times, Timone Limited has only one meat cutting machine in operation and it is the only non-current asset of the company. The operating costs include the monthly depreciation expense of the meat cutting machine. All monthly operating costs, other than the depreciation expense, are paid in the month when they are incurred. Both the old and new meat cutting machines are depreciated at 20% per annum on a straight-line basis. (f) The expected cash balance as at 30 June is GH¢ 308,000. Required: (a) Prepare a monthly cash budget for July, August and September together with a total column for the quarter. Question 1(b) Cash budget Timone Limited, a beer wholesaling company has the following budgeted information: Month Sales values Purchases Operating costs (before trade discount) GH¢ GH¢ 800,000 GH¢ May 960,000 1,020,000 115,000 110,000 120,000 130,000 125,000 June 600,000 July August September 810,000 1,200,000 1,410,000 900,000 1,100,000 700,000 Additional information: (a) 20% of sales are cash terms and cash customers enjoy a 5% trade discount based on the selling price. The remaining sales are on credit tems, 70% of which are collected in the month following sale and 30% of which are collected in the second month following sale. (b) Timone Limited sets its selling price on a uniform mark up of 50% of the cost of goods sold for both cash and credit sales. (c) All purchases are bought on credit and paid in the following month after purchase. (d) Timone Limited will buy a new meat cutting machine at a cash price of GH¢300,000 on 1 August. The old meat cutting machine, with a cost and carrying amount of GH¢210,000 and GH¢ 156,000 as at 1 August, will be traded in against the new machine at a trade-in allowance of GH¢120,000. At all times, Timone Limited has only one meat cutting machine in operation and it is the only non-current asset of the company. The operating costs include the monthly depreciation expense of the meat cutting machine. All monthly operating costs, other than the depreciation expense, are paid in the month when they are incurred. Both the old and new meat cutting machines are depreciated at 20% per annum on a straight-line basis. (f) The expected cash balance as at 30 June is GH¢ 308,000. Required: (a) Prepare a monthly cash budget for July, August and September together with a total column for the quarter.

Answer rating: 100% (QA)

Gash budget ParHeular Jily Pug Seb Opening balance Recorpt Cash Sales Collechon fuom de... View the full answer