QUESTION FIVE DECISION-MAKING 22 MARKS Part A Cash Budget 10 Marks Ignore GST for this question Lisa's Bridal Ltd sells bridal gowns to retail outlets throughout New Zealand. The company wants you to prepare a cash budget for the three months ended December 2013. 1 1. The business recently received a loan for $60,000. A principal repayment is due at the end of November for $5,000. Interest is calculated at 5% per annum and is payable monthly on any balance outstanding. 2. Sales (all on credit) Month Estimated $ June July August September October November December Actual $ 80,000 70,000 85,000 90,000 95,000 86,000 75,000 Accounts receivable are collected as follows: 70% in the month following the sale. These customers receive a 2% cash discount. 25% in the second month after the sale. 3% in the third month after sale. The remaining 2% are written off as bad debts at the end of the fourth month after the sale. . 3. Bridal Gown Purchases Month September October November December Actual $ 45,000 50,000 40,000 35,000 Purchases are paid for in the month following purchase and receive a 1% discount. 4. Expenses (per month) Depreciation $4,000 Wages and salaries are expected to be $2,000 Lease of premises $3,000 General expenses are estimated to be $14,000 per month and include any bad debts written off. Cash expenses are paid for in the month in which they are incurred. 5. Other information The opening bank balance is $20,000 CR. Required: a) Prepare a Statement of Estimated Receipts from Accounts Receivable for the three months ended 31 December 2013. Lisa's Bridal Ltd Statement of Estimated Receipts from Accounts Receivable for the three months ended 31 December 2013 Month of Transaction October November December Credit Sales $ $ $ $ Bad Debts (4 Marks) b) Prepare a Cash Budget for October, November and December 2013. Round amounts to the nearest dollar. Lisa's Bridal Ltd Cash Budget for the three months ended 31 December 2013 December October S November $ RECEIPTS TOTAL ESTIMATED RECEIPTS PAYMENTS TOTAL ESTIMATED PAYMENTS Net Cash Flow Opening Bank Balance Closing Bank Balance (6 Marks)