Homework Exercise 5 Submit by 14.10.2022

Lando Manufacturing Company prepares monthly cash budgets. operating budgets for Jan. to May are:

( Fig in $ '000)

Relevant data from

	January	February	March	April	May
Sales	700	800	900	1000	1100
Direct Materials purchases	200	220	270	300	310
Direct Labour	100	110	140	180	220
Manufacturing Overhead	120	150	180	190	200
Selling and Adm overhead	150	160	180	190	200

All sales are on account. Collections are expected to be 60% in the month of sales, 10% in the first month following the sale and 25% in the second month following the sale. 5% of the sales will become bad debts as the business deals with high risk customers.

Forty percent of direct material purchases are paid in cash after first month of purchase and the balance due is paid in the second month following the purchase. All other items above are paid in the month incurred. Manufacturing overheads include $ 20,000 as Depreciation on Machinery. Selling and Administration overheads include $ 10,000 as Depreciation on Office Equipment.

Credit sales: Nov.2004 $500,000 and Dec.2004 $ 600,000 Purchases of direct materials : Dec.2004 : 200,000

Other receipts Jan 2005 Interest receivable : 5,000

March. 2005 Proceeds from sale of securities : $15,000 May 2005 Government Grants :$ 10,000

Other disbursements: February 2005 $20,000 for land

March 2005 Tax payable $ 30,000

The company cash balance on 1.1.2005 is expected to be $ 60,000 The company wants to maintain a minimum cash balance of $ 50,000.

Required:

Prepare a cash budget for Jan to May 2005 in a columnar form.