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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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