Question From book Management Accounting - Principles And Applications - Hugh Coombs, David Hobbs, Ellis Jenkins Sage Publication

Pages 123

Question No 3 CZD Ltd supply records, tapes and CDs to retail outlets. You are presented with the following financial information and are required to complete the cash budget for the three months ending 31 December 2005

Opening cash 1/10/05 is 16,000. Creditors give one months credit. Salaries are paid in the same month as they are earned. Other expenses are paid one month in arrears and include 2000 depreciation each month. Credit sales are settled 30% in the month of the sale and the remainder one month following the sale.

(a) Prepare a cash budget for the months of October, November and December 2005. (b) Prepare a schedule of outstanding debtors at the end of each of the months of October, November and December 2005.

Cash sales Credit sales Purchases Salaries Expenses Month September 25,000 40,000 70,000 6,000 7,000 October 45,000 6,000 28,000 68,000 7,000 7,000 40,000 6,000 November 28,000 59,000 7,000 60,000 6,000 December 30,000 38,000