Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Account Executive of CJ Wow Shop has presented the following budgeted information for the eight months of 2017: Sales volume (units) Selling price per
The Account Executive of CJ Wow Shop has presented the following budgeted information for the eight months of 2017: Sales volume (units) Selling price per unit 15 Jan Feb Mar 50,000 100,000 30,000 15 40,000 150,000 3,500 3,500 10 45,000 5,000 May Jun 35,000 60,000 80,000 10 10 10 60,000 60,000 60,000 Jul Aug Sep 70,000 50,000 50,000 11 11 11 60,000 60,000 60,000 5,000 5,000 5,000 5,000 5,000 5,000 5% of sales 2,300 2,000 2,500 2,500 2,500 2,500 2,500 2,500 2,500 Salaries Rental Sales Commission Utilities Additional information is given below: 1.40% of the total sales is on cash basis. 2.60% of the total sales is on credit basis and which is paid at the end of next month. 3. Monthly purchases details: January to February: Purchases are 70% of the next month's normal sales value and are paid two months following the month of purchase. From March onward: Purchases are 40% of the next month's normal sales value and are paid two months following the month of purchase. The monthly normal selling price details given as below: Month Before March 2017 From March 2017 onward Normal unit selling price $15/unit $11/unit 4. All expenses are paid at the end of the month except for utilities. Utilities will be paid in the following month end. 5. A 10% down payment of $45,000 will be paid in the month end of March 2017 for acquisition of a new machine. The machine lifespan is 4 years. The machine is depreciated based on straight line method. All brought forward assets are fully depreciated. 6. Additional investment of $20,000 in the business is to be made on 31 March 2017. 7. As at end of February 2017, there is a credit bank balance of $12,500 as shown in the book. 8. The bank overdraft interest charges is 1.5% per month. 9. The business keeps $52,000 opening stocks in March 2017 and $60,000 closing stocks in August 2017. Required: Prepare the Cash Budget for six months from January to 31st August 2017. Note: All figures to be rounded-up to the nearest dollar (no decimal point)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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