The Golden Oranges Nursery, which provides facilities for pre-school children on a commercial basis, is preparing its cash budget for next year. A profile of the estimated revenues and expenses for the first four months of the financial year is as follows:June€July€August€September€Revenue:Fees due for payment64,00066,00050,00068,000Costs:Wages15,00015,00011,00015,000Purchase of Equipment Rent34,00028,0003,0003,000Electricity600400300500Telephone Insurance1,0001,00010,000Food & Supplies5,6005,0004,5005,500Depreciation800800800800The following additional information is available:1.At the beginning of June, it is estimated that the nursery’s bank account will be overdrawn by €4,000.2.In addition to receipts from Fees, the nursery will receive a loan of €5,000 from one of its owners in July, and sale of unwanted toys and equipment will raise.€1,500 cash in August.3.70 percent of the Fees are received in the month in which they fall due, the remaining 30 per cent are collected in the following month. This pattern is expected to continue throughout the year.4.Purchases of Food & Supplies will be paid in the month incurred.5.The purchase of Equipment is on credit and will be paid for in the month following purchase.6.All other costs will be paid for in the month incurred. Required:(a)Prepare the Golden Oranges Nursery’s cash budget for each of the first three months of the next financial year through to 31st August 20X0. Depreciation must be taken in count. 

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The Golden Oranges Nursery, which provides facilities for pre-school children on a commercial basis, is preparing its cash budget for next year. A profile of the estimated revenues and expenses for the first four months of the financial year is as follows: Revenue: Fees due for payment Costs: Wages Purchase of Equipment Rent Electricity Telephone Insurance Food & Supplies Depreciation 2. 3. 4. 5. June € 6. 64,000 15,000 3,000 600 1,000 5,600 800 July € 66,000 The following additional information is available: 1. 15,000 34,000 400 10,000 5,000 800 August € 50,000 11,000 28,000 300 4,500 800 September € 68,000 15,000 3,000 500 1,000 5,500 800 At the beginning of June, it is estimated that the nursery's bank account will be overdrawn by €4,000 In addition to receipts from Fees, the nursery will receive a loan of €5,000 from one of its owners in July, and sale of unwanted toys and equipment will raise €1,500 cash in August. 70 percent of the Fees are received in the month in which they fall due, the remaining 30 per cent are collected in the following month. This pattern is expected to continue throughout the year. Purchases of Food & Supplies will be paid in the month incurred. The purchase of Equipment is on credit and will be paid for in the month following purchase. All other costs will be paid for in the month incurred. The Golden Oranges Nursery, which provides facilities for pre-school children on a commercial basis, is preparing its cash budget for next year. A profile of the estimated revenues and expenses for the first four months of the financial year is as follows: Revenue: Fees due for payment Costs: Wages Purchase of Equipment Rent Electricity Telephone Insurance Food & Supplies Depreciation 2. 3. 4. 5. June € 6. 64,000 15,000 3,000 600 1,000 5,600 800 July € 66,000 The following additional information is available: 1. 15,000 34,000 400 10,000 5,000 800 August € 50,000 11,000 28,000 300 4,500 800 September € 68,000 15,000 3,000 500 1,000 5,500 800 At the beginning of June, it is estimated that the nursery's bank account will be overdrawn by €4,000 In addition to receipts from Fees, the nursery will receive a loan of €5,000 from one of its owners in July, and sale of unwanted toys and equipment will raise €1,500 cash in August. 70 percent of the Fees are received in the month in which they fall due, the remaining 30 per cent are collected in the following month. This pattern is expected to continue throughout the year. Purchases of Food & Supplies will be paid in the month incurred. The purchase of Equipment is on credit and will be paid for in the month following purchase. All other costs will be paid for in the month incurred.

Answer rating: 100% (QA)

To prepare the cash budget for the first three months June July and August we need to calculate the cash inflows and outflows for each month consideri... View the full answer