Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

hi, could you please help me, to complete cash budget Question 1 - Budget Preparation Cheap Phones Ltd Cheap Phones Ltd supplies mobile phones to

hi, could you please help me, to complete cash budget

Question 1 - Budget Preparation Cheap Phones Ltd

Cheap Phones Ltd supplies mobile phones to its customers. You have been given the following information.

  • Budgeted sales: 1,600 units November; 1,700 units December: 1,650 units January

  • Sales value $200 a unit

  • Collections: o 65%inmonth of sale

    o 30%month following

  • o 5%not collectible

  • Cost of goods sold is 50% of sales

  • Ending merchandise inventory is to equal 25% of the following months cost of goods

    sold

  • Goods are paid for in the month following purchase

  • Other monthly expenses paid for in cash are $17,000

  • Monthly depreciation is $6,000

  • Ignore taxes

  • A minimum cash balance of $135,000 is to be maintained and interest on any

    borrowings is 4% per month

  • Any unrecoverable sales amounts are to be carried forward in Accounts Receivable until they can be written off officially at year-end.

Statement of Financial Position October 31 20x2

Assets.

Cash $42,000 Accounts receivable (net of uncollectible amounts) Inventory. $16,000

Inventory $30,000 Property, plant and equipment (net of accumulated depreciation). $125,000 Total assets. $213,000

Liabilities and Equity Accounts payable. $12,000 Issued capital. $157,000 Retained earnings. $44,000 Total liabilities and stockholders equity. $213,000

1.Prepare a Sales Budget for November and December

2.Prepare a Purchases Budget for November and December

3.Prepare a Cash Budget for November and December

4.Prepare the Budgeted Income Statement for November and December

5.Prepare a Budgeted Balance sheet for the end of December

There is no seperate Selling and Admin budget required, but any figures that would be required for this will still be included within the Cash Budget, Income Statement and Balance sheet where applicable

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

Financial Accounting Reporting Analysis And Decision Making

Authors: Shirley Carlon, Rosina Mladenovic Mcalpine, Chrisann Palm, Lorena Mitrione, Ngaire Kirk, Lily Wong

5th Edition

0730313743, 978-0730313748

More Books

Students also viewed these Accounting questions