HASF PVT.LTD BUDGETED INCOME STATEMENT FOR 1st QUARTER 1999

Description JANUARY FEBRUARY MARCH Sales 285,000 323,000 221,000 Purchases 129,000 168,000 95,000 Wages 35,000 37,000 30,000 Supplies 26,000 23,000 21,500 Utilities 6,500 8,700 7,200 Rent 15,000 12,800 13,600 Insurance 12,000 12,000 12,000 Advertising 24,500 28,500 18,000 Depreciation 20,000 20,000 20,000 Net Profit 17,000 13,000 3,700

Required:

a. Please make a cash budget for the months of January, February and March 1999 based on the data for: (5 Marks) View Receivable Trend: 30% of Sales are collected in the month of sale 30% of Sales are collected after the month of sale 40% of Sales are collected two months after the sale is made View Payable Trend: 10% of Purchases are paid for in the month of purchase 35% of Purchases are paid after the month of purchase 55% of Purchases are paid two months after the purchase is made Additional Information: Rent and Insurance expense were prepaid at the end of 1998 All other expenses are paid for in the month they were incurred November Sales = 195,000 November Purchases = 100,000 December Sales = 250,000 December Purchases = 165,000 Please see attached Budgeted Income Statement for 1st Quarter 1999 b. Being a CFO of the company, interpret the importance budget in strategic and operational planning of the company (Word limit Max 150-200) (2 marks)

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