Question
Cosy Stoves Limited is planning a major capital investment in April 2022 which requires an extension of the companys bank overdraft. The company provides you
Cosy Stoves Limited is planning a major capital investment in April 2022 which requires an extension of the company’s bank overdraft. The company provides you with the following financial information:
Month | Sales | Purchases | Wages | Overheads |
£ | £ | £ | £ | |
January 2022 (budgeted) | 200,000 | 100,000 | 45,000 | 10,000 |
February 2022 (budgeted) | 225,000 | 125,000 | 50,000 | 12,000 |
March 2022 (budgeted) | 240,000 | 130,000 | 52,000 | 13,000 |
April 2022 (budgeted) | 260,000 | 135,000 | 55,000 | 15,000 |
May 2022 (budgeted) | 250,000 | 132,000 | 52,000 | 14,000 |
Notes
- The bank balance at 1st March 2022 is expected to be £35,000.
- 30% of sales are for cash with the other 70% being made on credit. 60% of credit sales pay in the month following the month of sale with the other 40% paying 2 months after the month of sale.
- Purchases are paid for in the month after the month in which they are made.
- 68% of wages are paid in the current month with the other 32% (representing tax and national insurance deductions) being paid over to the taxation authorities in the following month.
- Overheads are paid in the month in which they are incurred.
- The Directors of Cosy Stoves Limited are planning to purchase new property, plant and equipment for £300,000 in April 2022 in order to expand the business.
Questions
1. Prepare the cash budget for Cosy Stoves Limited for March, April and May 2022.
- Calculate the figures that will appear in the budgeted statement of financial position of Cosy Stoves Limited at 31st May 2022 for:
a. Trade receivables
b. Trade payables
c. Wages and salaries
Step by Step Solution
3.46 Rating (162 Votes )
There are 3 Steps involved in it
Step: 1
1 Prepare the cash budget for Cosy Stoves Limited for March April and May 2022 Cosy Stoves Limited Cash Budget For the Three Months Ended 30 June 2022 ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started