A A company's estimated pattern of costs and revenues for the first four months of (19 times
Question:
A A company's estimated pattern of costs and revenues for the first four months of \(19 \times 7\) 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 19X6 were \(£ 78,400\), and in December 19X6 \(£ 74,800\).
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 19 X6 are \(£ 398,400\), and for December \(19 \times 6, £ 402,600\).
3 Old factory equipment is to be sold in February \(19 \times 7\) for \(£ 9,600\). Receipt of the money is expected in April \(19 \times 7\). New equipment will be installed at a cost of \(£ 38,000\). One-half of the amount is payable in March 19X7 and the remainder in August 19X7.
4 Two-thirds of the wages are payable in the month they fall due, and one-third a month later: wages for December 19 X 6 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 19 X6 are expected to be \(£ 265,200\).
6 The opening bank balance at 1 January \(19 \times 7\) 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 \(19 \times 7\).
(b) Provide a statement to show those items in part
(a) which would appear in a budgeted balance sheet as at 30 April \(19 \times 7\).
Step by Step Answer:
