Question 1

Actual sales of a retail company, HAZEL Ltd, for November and December2021, together with budgeted monthly sales for January-June 2022, are shown below.

		Sales()
2021	November	180,000(actual)
	December	200,000(actual)
2022	January	180,000
	February	160,000
	March	150,000
	April	170,000
	May	140,000
	June	150,000

The following information became available to you:

• The purchase price of the goods for HAZEL Ltd for any month is 70% of sales.
• 60% of purchases are payable in the month of the purchase and the remaining amount is payable in the month following the purchase.
• Sales are 40% for cash and 60% on credit.
• 50% of credit sales are collected 1 month after the sale and the other 50% are collected 2 months after the sale. There are no bad debts.

Opening cash balance on 01 January 2022 was 13,600

Required:

1. Using the information available, prepare a monthly cash budget for HAZEL Ltd for the period from January 2022 to April 2022.

[16Marks]

You are also provided information on HAZEL Ltds estimated sales quantities for the second half of 2022:

Budgetedsales (units)
July	28,000
August	34,000
September	40,000
October	46,000
November	44,000
December	50,000

HAZEL Ltd has a policy of maintaining closing inventory of finished goods at the end of each month equal to 20% of the next months budgeted sales units. Budgeted sales units inJanuary2023are 55,000 units.