Question 2 Ewurabena OK is the management accountant for Charted Ltd. Ewurabena is planning on how...
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Question 2 Ewurabena OK is the management accountant for Charted Ltd. Ewurabena is planning on how to finance the operations for the final quarter of the year. Charted Ltd has a financial ending on 31" December. The following data is available to aid the preparation of the cash budget for the last quarter of the year, i.e.. October to December. 11. ii. iii. iv. V. vi. vii. viii. The actual sales for the third quarter were - July: GHe 100,000, August: GHe 120,000, and September: GHe90,000 Estimated sales for the October, November, and December are GHe100,000, GH¢135,000, and GHe 150,000 respectively. 20 per cent of sales made in each month are for cash, and the remaining 80 per cent are on credit. It is the policy of the company to collect 20 per cent of credit sales in the month of sale, 50 per cent in the month following sales and 30 per cent in the second month following sales. The closing inventory of finished goods each month equals 40 per cent of the cost of sales for the next month. The cost of sales for each month is 75 per cent of the month's sales. The company has the policy to pay for purchases in the month following purchases. Other recurring monthly expenses include: Wages and salaries: GHe 10,000, Depreciation on property, plant and equipment: GH4,000, Utilities: GHe1,000, and other Miscellaneous: GHe 1,700 Property taxes of GH¢15,000 are due and payable on 15th September. Advertising fees of GH¢6,000 must be paid on 20th October. A lease of a new storage facility, with a monthly payment of GH$5,000, is scheduled to begin on 2nd November. Ewurabena the actual cash balance at the end of August was GHe 10,000 and inventory of finished products at hand at the end of August were valued of GHe30,000. Required: a. Prepare a cash budget for the three (3) months - September, October and November-showing clearly your supporting schedules for the cash collection and any other workings. (13 marks b. What is a self-imposed or participatory budget? What are the major advantages of self-impose budgets? What caution must be exercised in their use? (8 mar c. How does zero-based budgeting differ from traditional incremental budgeting? (4 ma Total: 25 m Question 2 Ewurabena OK is the management accountant for Charted Ltd. Ewurabena is planning on how to finance the operations for the final quarter of the year. Charted Ltd has a financial ending on 31" December. The following data is available to aid the preparation of the cash budget for the last quarter of the year, i.e.. October to December. 11. ii. iii. iv. V. vi. vii. viii. The actual sales for the third quarter were - July: GHe 100,000, August: GHe 120,000, and September: GHe90,000 Estimated sales for the October, November, and December are GHe100,000, GH¢135,000, and GHe 150,000 respectively. 20 per cent of sales made in each month are for cash, and the remaining 80 per cent are on credit. It is the policy of the company to collect 20 per cent of credit sales in the month of sale, 50 per cent in the month following sales and 30 per cent in the second month following sales. The closing inventory of finished goods each month equals 40 per cent of the cost of sales for the next month. The cost of sales for each month is 75 per cent of the month's sales. The company has the policy to pay for purchases in the month following purchases. Other recurring monthly expenses include: Wages and salaries: GHe 10,000, Depreciation on property, plant and equipment: GH4,000, Utilities: GHe1,000, and other Miscellaneous: GHe 1,700 Property taxes of GH¢15,000 are due and payable on 15th September. Advertising fees of GH¢6,000 must be paid on 20th October. A lease of a new storage facility, with a monthly payment of GH$5,000, is scheduled to begin on 2nd November. Ewurabena the actual cash balance at the end of August was GHe 10,000 and inventory of finished products at hand at the end of August were valued of GHe30,000. Required: a. Prepare a cash budget for the three (3) months - September, October and November-showing clearly your supporting schedules for the cash collection and any other workings. (13 marks b. What is a self-imposed or participatory budget? What are the major advantages of self-impose budgets? What caution must be exercised in their use? (8 mar c. How does zero-based budgeting differ from traditional incremental budgeting? (4 ma Total: 25 m
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Answer rating: 100% (QA)
Cash budget The cash budget shows the cash inflows and cash outflows of a company It shows how a company uses its cash and where it gets its cash from 1 Cash collection from sales Particulars Septembe... View the full answer
Related Book For
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
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