Management Accounting

Coursework

b. ABC Company has a cash balance of $75,000 at the beginning of March and having regard to the following information. Creditors give 1 month credit Salaries are paid in the current month Fixed overheads are paid one month in arrears and include a charge for depreciation of $5,000 per month Variable overheads are paid two months in arrears Credit sales are settled as follows: 40% in the month of sale, 45% in the next month and 12% in the following month. The balance represents bad debts. Month Cash Sales Credit Sales Purchases $ $ $ January 74,000 55,200 February 82,000 61,200 March 20,000 80,000 60,000 April 22,000 90,000 69,000 May 25,000 100,000 75,000

Salaries Fixed Overheads Variable Overhead $ $ $ January 9,000 30,000 45,000 February 9,000 30,000 50,000 March 9,500 30,000 55,000 April 9,500 32,000 60,000 May 10,000 32,000 70,000

Required: i. Prepare the Debtors collection schedule for ABC Company for March to May (6 marks) ii. Prepare the Cash Budget for March, April and May (16 marks) (Total 25 marks)