Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
Question 1(b) The management accountant of Bucks Ltd has prepared its draft budgeted profit statement for the quarter ended 30 September 2023, as shown below.
Question 1(b) The management accountant of Bucks Ltd has prepared its draft budgeted profit statement for the quarter ended 30 September 2023, as shown below. July August 102,000 September 114,000 118,000 Purchases 72,000 65,000 88,000 Gross Profit 42,000 37,000 30,000 25,000 Wages Overheads 25,000 24,000 16,000 15,000 16,000 Net Profit/(Loss) 1,000 (3,000) (10,000) The following additional Information is relevant: Forty percent of sales are on cash basis, with the remainder being collected the month after. Bucks Ltd allows a 5% discount on all its cash sales. Sales in June amounted to 120,000 and no bad debts are anticipated. Purchases are settled one month in arrears. Purchases in June were 76,000. Wages are paid in the month they are incurred. Overheads include a fixed monthly depreciation charge of 2,000 and are paid one month in advance. Overheads in October 2023 are expected to be 14,000. The company intends to pay a dividend of 5,000 in September. Focus 5 of 16 1308 English (United Kingdo The correct anewer in P 300 words May T www www. The following additional information is relevant: Forty percent of sales are on cash basis, with the remainder being collected the month after. Bucks Ltd allows a 5% discount on all its cash sales. Sales In June amounted to 120,000 and no bad debts are anticipated. Purchases are settled one month in arrears. Purchases in June were 76,000. Wages are paid in the month they are incurred. Overheads include a fixed monthly depreciation charge of 2,000 and are paid one month in advance. Overheads in October 2023 are expected to be 14,000. The company intends to pay a dividend of 5,000 in September. The cash balance on 1" of July 2023 is 2,000. Required (a) Given the above information, prepare a cash budget for the 3 months July to September 2023. [6 marks) (b) Critically evaluate the cash budget that you have prepared for Bucks Ltd above. In your answer, you should also discuss possible remedial action that Bucks Ltd could take in relation to the cash budget you have produced. [7 marks] Fou 17 English (United Kingdom 4.0 The correct answer in R Style D Estor 100%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started