Cash budgeting. (40-50 minutes) On 1 December 2000, Tire-Lire, SNC, is attempting to project cash receipts and disbursements to 31 January 2001. On this latter date, a note will be payable in the amount of FFr 100,000. This amount was borrowed in September to carry the company through the seasonal peak in November and December.

The trial balance on 1 December shows in part the following information: njuy9

Sales terms call for a 2% discount if payment is made within the first 10 days of the month after purchase, with the balance due by the end of the month after purchase. Experience has shown that 70% of the billings will be collected within the discount period, 20% by the end of the month after purchase, 8% in the following month, and that 2% will be uncollectable. There are no cash sales.
The average selling price of the company’s products is FFr 100 per unit. Actual and projected sales are

All purchases are payable within 15 days. Thus approximately 50% of the purchases in a month are due and payable in the next month. The average unit purchase cost is FFr 70. Target closing stocks are 500 units plus 25%
of the next month’s unit sales.
Total budgeted marketing, distribution and customer-service costs for the year are FFr 400,000. Of this amount, FFr 150,000 is considered fixed (and includes depreciation of FFr 30,000). The remainder varies with sales. Both fixed and variable marketing, distribution and customerservice costs are paid as incurred.
REQUIRED Prepare a cash budget for December and January. Supply supporting schedules for collections of debtors due payments for raw materials, and marketing, distribution and customer-service costs.

Transcribed Image Text:

Allowance for bad debts Cash Debtors Stock Creditors FFr 10,000 280,000 FFr 15,800 87,500 92,000