Section 2: Budgeting Systems and Variance Analysis

10 marks

The manager ofThe Bookstoreis updating their budget for the upcoming two months, November and December. The following information is available:

• The following balances are expected for the end of this month (31 October): cash $140,000; accounts receivable $220,000, accounts payable $80,000 and unpaid expenses $15,000. The manager separately estimated that 90% of the amount outstanding from customers at the end of this month is to be collected in November and the remainder uncollectable.
• 60% of monthly sales are on credit. Typically receipts from credit customers are approximately 50% in the month of sale, 48% in the month following the sale, and the remainder is uncollectable.
• Projected balances for the next two months are as follows:

	November	December
Sales revenue	370,000	374,000
Purchases	128,000	130,000
Other expenses	25,000	26,000
Salaries	60,000	60,000
Depreciation	10,000	10,000

• The Bookstorehas placed an order for new furniture in November that will cost $40,000. The scheduled payment date is in January next year.
• 40% of goods purchased are paid for in the month of purchase and the remaining is paid in the following month.
• Salaries are paid before the end of each month. 50% of other monthly expenses are paid for in the month incurred and the remainder paid in the following month.

Required:

Prepare the schedule of cash payments for November and December. (10 marks)