A company’s estimated pattern of costs and revenues for the first four months of 2007 is as follows:

1 One-quarter of the materials are paid for in the month of production and the remainder two months later: deliveries received in November 2006 were £78,400, and in December 2006 £74,800.
2 Customers are expected to pay one-third of their debts a month after the sale and the remainder after two months: sales expected for November 2006 are £398,400, and for December 2006, £402,600.
3 Old factory equipment is to be sold in February 2007 for £9,600. Recent of the money is expected in April 2007. New equipment will be installed at a cost of £38,000. One-half of the amount is payable in March 2007 and the remainder in August 2007.
4 Two-thirds of the wages are payable in the month they fall due, and one-third a month later:
wages for December 2006 are estimated at £15,900.
5 £50,000 of total monthly overheads are payable in the month they occur, and the remainder one month later: total overheads for December 2006 are expected to be £265,200.
6 The opening bank balance at 1 January 2007 is expected to be an overdraft of £10,600.

Required:

(a) Using the information above, prepare the firm's cash budget for the period January-April 2007.

(b) Provide a statement to show those items in part

(a) which would appear in a budgeted balance sheet as at 30 April 2007.

Transcribed Image Text:

Cost and Revenues: January-April 2007 (000) Month Sales Materials Wages Overheads January 410.4 81.6 16.2 273.6 February 423.6 84.8 16.8 282.4 March 460.8 93.6 18.3 306.7 April 456.3 91.2. 18.6 304.5