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A survey of Australian organisations on the degree of satisfaction with budgeting systems found that many organisations (almost 40%) were negative about the value of

  1. A survey of Australian organisations on the degree of satisfaction with budgeting systems found that many organisations (almost 40%) were negative about the value of their firms budgeting system. What are some possible reasons for this negativity about the value of budgeting systems? Given this negativity, should firms simply reduce their focus on budgets? Discuss.

  1. The following information has been obtained from the financial records of Albury Ltd, a retailer of cosmetic products:

Sales

Purchases

June

$60,000

$36,000

July

$78,000

$54,000

August

$66,000

$60,000

  • Receipts from customers are normally 70 percent in the month of sale, 20 percent in the month following the sale, and 9 percent in the second month following the sale. One percent of all sales are expected to be uncollectable.
  • All purchases are paid for in the month following the purchase.
  • Cash payments for expenses (other than purchases) are expected to be $14,400 for the month of August.
  • Alburys cash balance on 1 August was $22,000.

Required

Prepare a cash budget for August that identifies the expected cash receipts, cash payments and ending cash balance on 31 August.

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