QUESTION 2 You are in charge of making forecasts and preparing budgets. You have been supplied...

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QUESTION 2 You are in charge of making forecasts and preparing budgets. You have been supplied with cost and revenue forecasts and details of payment as follows: 1. Forecast of revenue and costs for the quarter ending 31 March 2001 February January Shs. Shs. Direct Materials (purchases) Wages Overhead Production Administration Selling and distribution Sales 112,000 90,000 34,000 22,000 13,000 360,000 100,000 80,000 32,000 20,000 11,000 350,000 2. Forecast of revenue and costs for the quarter ending 30 June 2001 March Shs. 135,000 100,000 40,000 27,000 18,000 440,000 Direct Materials (purchases) Wages Overhead Production Administration Selling and distribution Sales Cash balance on 1 April 2001 April Sh. 90,000 72,000 45,000 22,000 13,000 350,000 May Sh. 67,000 54,000 36,000 25,000 11,000 360,000 June Sh. 79,000 63,000 Other details Period of credit allowed by suppliers averages two months. Debenture to the value of Shs. 125,000 are being issued in May 2001 and the amount is expected to be received during the month. Required: A cash budget on a monthly basis from the second quarter of the year 2001. 40,000 27,000 16,000 360,000 Sh. 90,000 A new machine is being installed at the end of March 2001 at a cost of Sh 150,000 and payment is promised in early May 2001. Sales commission of 3% is payable within one month of sales. A dividend of Sh 100,000 is to be paid in June 2001. There is a delay of one month in the payment of overheads. There is also a delay in payment of wages averaging a quarter of a month. Deadline 31st October 2023 Twenty per cent of the debtors pay cash, receiving a cash discount of 4% and 70% of debtors pay within one month and receive a cash discount of 2 %2%. The other debtors pay within two months. QUESTION 2 You are in charge of making forecasts and preparing budgets. You have been supplied with cost and revenue forecasts and details of payment as follows: 1. Forecast of revenue and costs for the quarter ending 31 March 2001 February January Shs. Shs. Direct Materials (purchases) Wages Overhead Production Administration Selling and distribution Sales 112,000 90,000 34,000 22,000 13,000 360,000 100,000 80,000 32,000 20,000 11,000 350,000 2. Forecast of revenue and costs for the quarter ending 30 June 2001 March Shs. 135,000 100,000 40,000 27,000 18,000 440,000 Direct Materials (purchases) Wages Overhead Production Administration Selling and distribution Sales Cash balance on 1 April 2001 April Sh. 90,000 72,000 45,000 22,000 13,000 350,000 May Sh. 67,000 54,000 36,000 25,000 11,000 360,000 June Sh. 79,000 63,000 Other details Period of credit allowed by suppliers averages two months. Debenture to the value of Shs. 125,000 are being issued in May 2001 and the amount is expected to be received during the month. Required: A cash budget on a monthly basis from the second quarter of the year 2001. 40,000 27,000 16,000 360,000 Sh. 90,000 A new machine is being installed at the end of March 2001 at a cost of Sh 150,000 and payment is promised in early May 2001. Sales commission of 3% is payable within one month of sales. A dividend of Sh 100,000 is to be paid in June 2001. There is a delay of one month in the payment of overheads. There is also a delay in payment of wages averaging a quarter of a month. Deadline 31st October 2023 Twenty per cent of the debtors pay cash, receiving a cash discount of 4% and 70% of debtors pay within one month and receive a cash discount of 2 %2%. The other debtors pay within two months.

Answer rating: 100% (QA)

April 2001 Inflows Sales 350000 Cash Receipts from Debtors 70 70 of 350000 07 350000 252000 Cash Receipts from Cash Debtors 20 20 of 350000 02 350000 ... View the full answer