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Section 5: Budgets 10 marks The manager of Ingrid Ltd is preparing their budget for the upcoming fiscal quarter, commencing 1 January. The following information
Section 5: Budgets 10 marks
The manager ofIngrid Ltdis preparing their budget for the upcoming fiscal quarter, commencing 1 January. The following information is available:
- The following balances are expected for the end of this month (31 December): cash $20,000; accounts receivable $140,000, accounts payable $50,000 and unpaid expenses $16,000. The manager expects 95% of the amount outstanding from customers at the end of this month to be collected in January and the remainder uncollectable.
- Projected balances for the next quarter are as follows:
January | February | March | |
Sales revenue | 152,000 | 154,000 | 160,000 |
Purchases | 80,000 | 82,000 | 84,000 |
Salaries | 20,000 | 20,000 | 20,000 |
Depreciation | 5,000 | 5,000 | 5,000 |
Other expenses | 32,000 | 33,000 | 34,000 |
- 80% of monthly sales are on credit. Receipts from credit customers are normally 70% in the month of sale, 26% in the month following the sale, and the remainder is considered uncollectable.
- 40% of goods purchased are paid for in the month of purchase and the remaining is paid in the following month.
- Salaries are paid before the end of each month. 50% of other monthly expenses are paid for in the month incurred and the remainder paid in the following month.
- Ingrid Ltdhas placed an order for new furniture that will cost $20,000. The scheduled payment date is in April.
Required:
Prepare the schedule of cash receipts for January to March. (10 marks)
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