Question 2

As a Finance controller of Unity Namibia Ltd. You are to prepare a cash budget for the last quarter of 2022 as a way of managing the companys working capital or the cash components of it

The following Informations are available:

a) Sales for the last six months of the year, July to December is forecasted as follows

N$

July 320

August 420

September 550

October 690

November 730

December 600

b) Company history show that sales are on credit and there is no bad ebt. Of the credit sales 60% are collected in the month of sales, 30% are collected one month afterward and the reaming 10% collected in the following month

c) The company sales all that it produces each month. The cost of raw material equals to 40% of each month of sales. Of raw material purchased 65% are paid for in the month of purchase, the remaining 35% are paid in the following month

d) Wages total N$60m per month and are paid for in the month incurred

e) Operating expenses per month totalled N$120m

f) Old equipment will be sold in October 4 for N$15m

g) On October 10, new equipment will be purchased for N$ 80m

h) Rent of N$ 300m for the period is due payable in December 2022

i) The company readjusted and agree t maintain a minimum cash balance of N$150m and a maximum of N$300mfrom the end of October 2022

j) The cash balance on October 1st amounted N$10.5m

You are required to prepare a cash budget for Unit Namibia Ltd covering the last quarter October to December 2022. Use any approach that you familiar with but show workings