Clean Enterprise Limited Cash sales Credit sales Credit purchases Salaries Utilities Depreciation Property taxes Insurance Advertising Statutory deductions Other expenses 2020 December $'000 12.000 30,000 40,000 5,000 500 1.000 0 0 500 1,500 300 2021 January $'000 5.000 12,000 18,000 5,000 300 1.000 0 3,000 0 1.800 100 2021 February $'000 6,000 10,000 40,000 5.000 300 1,000 0 0 100 1,500 100 2021 March $'000 10.000 26,000 10,000 7.000 400 1,000 100 0 300 2,100 200 Additional information: 1. Collection from credit customers are normally 60% in the month of sale, 30% in the month following sale and the balance of 10% in the second month following sale. 2. The credit sale for November 2020 was $14,000,000 3. Including in the November 2020 credit sales is a credit sale to Hard Luck Limited. The company (Hard Luck Limited) purchased $100,000 goods on November 1, 2020. A notice in the newspaper on November 6, 2020 indicated that a loan creditor of the company had placed the company into receivership 4. Credit purchases are paid for in the month following purchase. 5. The company is expected to invest $12,000,000 on fixed deposit for six months on December 1, 2020. The company will receive a 5% rate of return per annum. The interest income will be received on a monthly basis. 6. A bonus of 2% of total sales for December 2020 will be paid to staff members in January 2021. 7. Salaries, utilities, property taxes, insurance, advertising and other expenses are paid in the month incurred 8. Financial institutions charge no penalty for paying a loan before the due date. Financial institutions will charge a penalty of $5,000 if a company liquidates its investment early. 9. Statutory deductions are paid for in the month following the payroll deductions. Corporation tax for 2021 is estimated at $1,200,000 and is normally paid on a quarterly basis. The first payment is normally made on March 31. 10. The expected closing cash and bank balance on December 31, 2020 is expected to be $8,000,000. 11. The company wants to purchase computer equipment costing $8,000,000 in March 2021 and wants to obtain an overdraft to purchase the computer equipment. The computer equipment is expected to last for 4 years. The company will also need to purchase software in March 2021 at a cost of $1,000,000. No funds have been identified to purchase the software. 12. The company's Statement of Financial Position reveals a loan amounting to $4,000,000 at an interest rate of 10% per annum. The interest is paid quarterly on March 31, June 30, September 30, and December 31. The loan is to be repaid on February 28, 2021. The company pays the interest on a monthly basis. Required (1) (2) Assume that you are employed by the company. What recommendations would you make to the management team of the company? (2 marks) Prepare the revised cash budget for the quarter ending March 31, 2021 incorporating any relevant recommendation(s) you made in (1) above. (6 marks) Clean Enterprise Limited Cash sales Credit sales Credit purchases Salaries Utilities Depreciation Property taxes Insurance Advertising Statutory deductions Other expenses 2020 December $'000 12,000 30.000 40,000 5,000 500 1,000 0 0 500 1,500 300 2021 January S'000 5,000 12.000 18,000 5,000 300 1,000 0 3,000 0 1,800 100 2021 February $'000 6,000 10,000 40,000 5,000 300 1.000 0 0 100 1,500 100 2021 March $'000 10.000 26,000 10,000 7,000 400 1.000 100 0 300 2.100 200 Additional information: 1. Collection from credit customers are normally 60% in the month of sale, 30% in the month following sale and the balance of 10% in the second month following sale. 2. The credit sale for November 2020 was $14,000,000 3. Including in the November 2020 credit sales is a credit sale to Hard Luck Limited. The company (Hard Luck Limited) purchased $100,000 goods on November 1, 2020. A notice in the newspaper on November 6, 2020 indicated that a loan creditor of the company had placed the company into receivership 4. Credit purchases are paid for in the month following purchase. 5. The company is expected to invest $12,000,000 on fixed deposit for six months on December 1, 2020. The company will receive a 5% rate of Tetum per annum. The interest income will be received on a monthly basis. 6. A bonus of 2% of total sales for December 2020 will be paid to staff members in January 2021. 7. Salaries, utilities, property taxes, insurance, advertising and other expenses are paid in the month incurred. 8. Financial institutions charge no penalty for paying a loan before the due date Financial institutions will charge a penalty of $5,000 if a company liquidates its investment early. 9. Statutory deductions are paid for in the month following the payroll deductions Corporation tax for 2021 is estimated at $1,200,000 and is normally paid on a quarterly basis. The first payment is normally made on March 31. 10. The expected closing cash and bank balance on December 31, 2020 is expected to be $8,000,000. 11. The company wants to purchase computer equipment costing $8,000,000 in March 2021 and wants to obtain an overdraft to purchase the computer equipment. The computer equipment is expected to last for 4 years. The company will also need to purchase software in March 2021 at a cost of $1,000,000. No funds have been identified to purchase the software. 12. The company's Statement of Financial Position reveals a loan amounting to $4,000,000 at an interest rate of 10% per annum. The interest is paid quarterly on March 31, June 30, September 30, and December 31. The loan is to be repaid on February 28, 2021. The company pays the interest on a monthly basis. Required (1) Assume that you are employed by the company. What recommendations would you make to the management team of the company? (2 marks) (2) Prepare the revised cash budget for the quarter ending March 31, 2021 incorporating any relevant recommendation(s) you made in (1) above. (6 marks) Clean Enterprise Limited Cash sales Credit sales Credit purchases Salaries Utilities Depreciation Property taxes Insurance Advertising Statutory deductions Other expenses 2020 December $'000 12.000 30,000 40,000 5,000 500 1.000 0 0 500 1,500 300 2021 January $'000 5.000 12,000 18,000 5,000 300 1.000 0 3,000 0 1.800 100 2021 February $'000 6,000 10,000 40,000 5.000 300 1,000 0 0 100 1,500 100 2021 March $'000 10.000 26,000 10,000 7.000 400 1,000 100 0 300 2,100 200 Additional information: 1. Collection from credit customers are normally 60% in the month of sale, 30% in the month following sale and the balance of 10% in the second month following sale. 2. The credit sale for November 2020 was $14,000,000 3. Including in the November 2020 credit sales is a credit sale to Hard Luck Limited. The company (Hard Luck Limited) purchased $100,000 goods on November 1, 2020. A notice in the newspaper on November 6, 2020 indicated that a loan creditor of the company had placed the company into receivership 4. Credit purchases are paid for in the month following purchase. 5. The company is expected to invest $12,000,000 on fixed deposit for six months on December 1, 2020. The company will receive a 5% rate of return per annum. The interest income will be received on a monthly basis. 6. A bonus of 2% of total sales for December 2020 will be paid to staff members in January 2021. 7. Salaries, utilities, property taxes, insurance, advertising and other expenses are paid in the month incurred 8. Financial institutions charge no penalty for paying a loan before the due date. Financial institutions will charge a penalty of $5,000 if a company liquidates its investment early. 9. Statutory deductions are paid for in the month following the payroll deductions. Corporation tax for 2021 is estimated at $1,200,000 and is normally paid on a quarterly basis. The first payment is normally made on March 31. 10. The expected closing cash and bank balance on December 31, 2020 is expected to be $8,000,000. 11. The company wants to purchase computer equipment costing $8,000,000 in March 2021 and wants to obtain an overdraft to purchase the computer equipment. The computer equipment is expected to last for 4 years. The company will also need to purchase software in March 2021 at a cost of $1,000,000. No funds have been identified to purchase the software. 12. The company's Statement of Financial Position reveals a loan amounting to $4,000,000 at an interest rate of 10% per annum. The interest is paid quarterly on March 31, June 30, September 30, and December 31. The loan is to be repaid on February 28, 2021. The company pays the interest on a monthly basis. Required (1) (2) Assume that you are employed by the company. What recommendations would you make to the management team of the company? (2 marks) Prepare the revised cash budget for the quarter ending March 31, 2021 incorporating any relevant recommendation(s) you made in (1) above. (6 marks) Clean Enterprise Limited Cash sales Credit sales Credit purchases Salaries Utilities Depreciation Property taxes Insurance Advertising Statutory deductions Other expenses 2020 December $'000 12,000 30.000 40,000 5,000 500 1,000 0 0 500 1,500 300 2021 January S'000 5,000 12.000 18,000 5,000 300 1,000 0 3,000 0 1,800 100 2021 February $'000 6,000 10,000 40,000 5,000 300 1.000 0 0 100 1,500 100 2021 March $'000 10.000 26,000 10,000 7,000 400 1.000 100 0 300 2.100 200 Additional information: 1. Collection from credit customers are normally 60% in the month of sale, 30% in the month following sale and the balance of 10% in the second month following sale. 2. The credit sale for November 2020 was $14,000,000 3. Including in the November 2020 credit sales is a credit sale to Hard Luck Limited. The company (Hard Luck Limited) purchased $100,000 goods on November 1, 2020. A notice in the newspaper on November 6, 2020 indicated that a loan creditor of the company had placed the company into receivership 4. Credit purchases are paid for in the month following purchase. 5. The company is expected to invest $12,000,000 on fixed deposit for six months on December 1, 2020. The company will receive a 5% rate of Tetum per annum. The interest income will be received on a monthly basis. 6. A bonus of 2% of total sales for December 2020 will be paid to staff members in January 2021. 7. Salaries, utilities, property taxes, insurance, advertising and other expenses are paid in the month incurred. 8. Financial institutions charge no penalty for paying a loan before the due date Financial institutions will charge a penalty of $5,000 if a company liquidates its investment early. 9. Statutory deductions are paid for in the month following the payroll deductions Corporation tax for 2021 is estimated at $1,200,000 and is normally paid on a quarterly basis. The first payment is normally made on March 31. 10. The expected closing cash and bank balance on December 31, 2020 is expected to be $8,000,000. 11. The company wants to purchase computer equipment costing $8,000,000 in March 2021 and wants to obtain an overdraft to purchase the computer equipment. The computer equipment is expected to last for 4 years. The company will also need to purchase software in March 2021 at a cost of $1,000,000. No funds have been identified to purchase the software. 12. The company's Statement of Financial Position reveals a loan amounting to $4,000,000 at an interest rate of 10% per annum. The interest is paid quarterly on March 31, June 30, September 30, and December 31. The loan is to be repaid on February 28, 2021. The company pays the interest on a monthly basis. Required (1) Assume that you are employed by the company. What recommendations would you make to the management team of the company? (2 marks) (2) Prepare the revised cash budget for the quarter ending March 31, 2021 incorporating any relevant recommendation(s) you made in (1) above. (6 marks)