Managerial accounting

J A G U A R Was recently formed as an event management company. The following information has been drawn from the budgets prepared in the planning exercise so far. Sales value November Enil December E65,000 January E80,000 February 192,000 March 198,000 Direct wages E8,500 per month Direct materials purchases (e.g. food and drink) December E12,000 January E13,000 February E15,000 March E20,000 (i) The industry has a poor credit collection reputation and therefore JAGUAR heavily encourage early payment and thus are predicting very few credit customers not to pay. The company sells 20% of its goods for cash at a discount of 20%. The remainder of customers receive two months' credit. JAGUAR allows credit customers a 10% discount if they pay within 1 month. This policy means that on average 50% of credit customers pay within 30 days. The management believe that the threat of non-payment cannot be ruled out altogether and a provision for doubtful debts should be set up on 31* March for $2,500. (ii) Payments to suppliers are made at the time of purchase and a discount of 5% is allowed. (iii) Wages are paid as they are incurred. (iv) Administrative overheads are $11,500 per month and selling and distribution overheads amount to $14,000 per month. Included in the amounts for administrative overheads and selling and distribution overheads are depreciation charges of $1,500 and $500 respectively. (v) JAGUAR expects to purchase an integrated IT system in February for a cash payment of $10,500. (vi) The balance sheet as at 315 December 2009 showed an overdraft balance of E(10,000); inventories of $10,000; and a liability for a staff bonus of $5,000. The bonus will be paid in January and closing inventories are expected to be $12,000 as at 31 1 March 2021. Required: Use Excel Sheet (a) Prepare a cash budget for each of the months January to March. [10 marks] (b ) Prepare an income statement for the three month period ending 31 st March 2021. [8 marks]