Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Al Zuleika LLC had faced liquidity problems for the past two years. During 2019, the company implemented strict and efficient cash management so that liquidity

image text in transcribed
Al Zuleika LLC had faced liquidity problems for the past two years. During 2019, the company implemented strict and efficient cash management so that liquidity problem does not arise in the year 2019. The company plans to prepare cash budget for the three months ending December 2019. The following information is furnished to you: Wages in RO) Production Overheads in RO) Administration & Selling Costs in RO) Month in units) August September October 300 300 350 350 November December 480 1000 Credits are The selling price per unit is RO 10 Sales - Acredit period of 3 months is allowed to debtors. 10% of sales are on cash basis. On an average, 50% of credit sales are paid on the due dates while the other 50% are paid in the month following The company's policy is to purchase materials equivalent to 50% of the next month sales. The purchase price of raw material is RO 3 per unit. Delay in payment to Creditosis 2 months iv. Lagin payment of expenses is only for wages & production overheads: Wages month: Production overheads month V. Cash and bunk balance on October RO 12.500 Other information: Plant & Machinery to be installed in August at a cost of RO 24,000. It will be paid for by monthly installment of RO 500 from October 1 Preference share dividend at Son RO 50,000 to be paid on 1 December Call money on 250 equity shares @RO 2 per share to be received in November Dividends from investments amounting to RO 250 are expected to be received on 31 December Income tax advance to be paid in December RO 500 a) You are required to prepare a cash budget 1) With reference to the cash budget prepared for Al Zulia LLC, as a management accountant of the company comments in Cash position at the end of the period and get the suitable measures to the management that could be possibly taken in such a situation marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Audit Proofing Your Return

Authors: Jr. Wade, Jack Warren

1st Edition

002622240X, 978-0026222402

More Books

Students also viewed these Accounting questions