Electronic Point Irish Courier Ltd (EPIC Ltd) is currently suffering cashflow problems and the Finance Director...

  

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Electronic Point Irish Courier Ltd (EPIC Ltd) is currently suffering cashflow problems and the Finance Director wants you to prepare a cash budget based on the following information for the next quarter to 30 June 2019: Balances brought forward from quarter ended 30 March 2019 are as follows: Quarter ended 30 March 2019 € € Non-Current Assets 750,000 Current Assets Inventory Trade receivables 375,000 581,125 75,000 Other receivables 1,031,250 Total Assets 1,781,250 Equity and Liabilities: Ordinary share capital (Nominal value €1) Retained carnings Current Liabilities: 75,000 900,000 Bank overdraft 206,250 Trade payables Тах 375,000 3225,00000 806,250 1,781,250 Additional information: (a) Sales for the next 3 months are forecast as follows: April € May € June € 975,000 1,050,000 1,087,500 10% of the sales are cash sales. The remainder of the sales are on credit and are paid one month after the sale. 5% of the total sales for each month are usually irrecoverable. (b) Purchases for the next three months are forecast as follows: April May € June € 562,500 605,230 626,550 All the purchases are on credit with suppliers allowing one month's credit. Salaries of €172,500 will be paid cach month. The directors will receive a bonus of €120,000 in April. (c) EPIC will undertake an extensive television and radio marketing campaign costing €11,250 which is payable in May. EPIC will make a legal settlement for an ongoing court case in respeet of an unfair dismissal claim for €22,500 in April. The tax liability outstanding is due for payment to the tax authorities in June. (d) (e) (f) (g) EPIC just purchased a packaging machine (in April) for €37,500. This will be paid for in the month of June. (h) An additional 57,000 ordinary shares will be issued in April at a price of €1.20 per share. Requirement (i) Prepare a cash budget for each of the three months April to June 2019 showing the net cash position at the end of each month (use tabular format). List three appropriate actions to deal with any surpluses or deficits arising. (20 Marks) (ii) (3 Marks) Electronic Point Irish Courier Ltd (EPIC Ltd) is currently suffering cashflow problems and the Finance Director wants you to prepare a cash budget based on the following information for the next quarter to 30 June 2019: Balances brought forward from quarter ended 30 March 2019 are as follows: Quarter ended 30 March 2019 € € Non-Current Assets 750,000 Current Assets Inventory Trade receivables 375,000 581,125 75,000 Other receivables 1,031,250 Total Assets 1,781,250 Equity and Liabilities: Ordinary share capital (Nominal value €1) Retained carnings Current Liabilities: 75,000 900,000 Bank overdraft 206,250 Trade payables Тах 375,000 3225,00000 806,250 1,781,250 Additional information: (a) Sales for the next 3 months are forecast as follows: April € May € June € 975,000 1,050,000 1,087,500 10% of the sales are cash sales. The remainder of the sales are on credit and are paid one month after the sale. 5% of the total sales for each month are usually irrecoverable. (b) Purchases for the next three months are forecast as follows: April May € June € 562,500 605,230 626,550 All the purchases are on credit with suppliers allowing one month's credit. Salaries of €172,500 will be paid cach month. The directors will receive a bonus of €120,000 in April. (c) EPIC will undertake an extensive television and radio marketing campaign costing €11,250 which is payable in May. EPIC will make a legal settlement for an ongoing court case in respeet of an unfair dismissal claim for €22,500 in April. The tax liability outstanding is due for payment to the tax authorities in June. (d) (e) (f) (g) EPIC just purchased a packaging machine (in April) for €37,500. This will be paid for in the month of June. (h) An additional 57,000 ordinary shares will be issued in April at a price of €1.20 per share. Requirement (i) Prepare a cash budget for each of the three months April to June 2019 showing the net cash position at the end of each month (use tabular format). List three appropriate actions to deal with any surpluses or deficits arising. (20 Marks) (ii) (3 Marks)

Answer rating: 100% (QA)

answers Cash Budget for the months of April May and June Particulars April May June Opening bal of B... View the full answer