David Ltd is a small business that manufactures teddy bears. 

The following information is available for the next four months:

Additional information: 

• Each teddy bear sells for $15. 

• Each month 20 per cent of the sales are expected to be on a cash basis and customers will receive a 5 per cent cash discount for prompt payment. 

• Fifty per cent of trade receivables are expected to pay after one month. The remainder are expected to pay after two months. 

• Trade receivables on 1 January are expected to be: $21,600 from December sales (of which $10 800 wil be paid in January and the balance in February) and $7200 from November sales (which will be paid in January). 

• Overheads are $8200 per month.

• Each teddy bear costs $8 to make ($3 for material costs and $5 for labour). The materials are paid for one month after purchase and the labour costs are paid in the month of employment. On 1 January there is $5700 owing for materials purchased in December. 

• Teddy bears are produced in the same month in which they are sold. 

• There is $2100 in the bank on 1 January. 

Required 

Prepare a cash budget for David Ltd for each of the four months January to April.

Transcribed Image Text:

January February March April Expected 2 000 2 200 2 300 2 200 Production and sales (teddy bears)