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ABC expects to have a cash balance of $12,000 on 1 November 2022. Relevant monthly budget data for the last 2 months of 2022 are
ABC expects to have a cash balance of $12,000 on 1 November 2022. Relevant monthly budget data for the last 2 months of 2022 are as follows: Collections from customers: November $87,000; December $169,000. Payments to suppliers: November $50,000; December $88,000. Direct labour: November $40,000; December RM45,000. Wages are paid in the month they are incurred. Manufacturing overhead: November $21,000; December $30,000. These costs include depreciation of $1,000 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: November $15,000; December $20,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of investments in November are expected to realise $35,000 in cash. ABC has a line of credit at a local bank that enables it to borrow up to $25,000. The entity wants to maintain a minimum monthly cash balance of $10,000. Question a) Prepare a cash budget for ABC for the months of November and December 2022 b) Discuss various ways of receivables management
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