Question
The budgeted transactions of Sandwich Incorporated for the quarter ending 30 April 2022 are as follows: i. Budgeted sales amount to $ 1 152 630,98.
The budgeted transactions of Sandwich Incorporated for the quarter ending 30 April 2022 are as follows:
i. Budgeted sales amount to $ 1 152 630,98. (38 % will be sold during February 2022, 34 % during March 2022 and the rest during April 2022. 49 % of the sales are expected to be made on credit. Debtors usually pay their debt as follows:
46 % in the month following the month of sales
28 % in the second month following the month of the sales
18 % in the third month following the month of the sales
8 % is written off as irrecoverable in the last month of collection
ii. Purchases are expected to amount to $ 720 394,00. Assume that opening and closing inventories will remain constant and that a constant markup percentage is maintained throughout. 41% of all the purchases are made on credit, while creditors are paid in the month following the month in which the purchases were made.
iii. Sales personnel receive a commission of 14 % on all sales. Office personnel receive monthly salaries of
$ 13 098,00 each. There are 12 office staff members. The commission and salaries are paid in cash every month.
iv. New office equipment with a hire purchase price of $ 230 526,20 will be purchased on 1 February 2022. A deposit of 40 % of the HP price must be paid on 1 February 2022, and the balance must be paid in 55 equal monthly instalments beginning 1 March 2022. $ 8 538,01 depreciation is to be written off per month on this vehicle as of 1 April 2022.
v. Income tax amounting to $ 26 196,00 is payable during April 2022 to IRS.
vi. Dividends of $ 19 647,00, declared on 8 January 2022, must be paid during March 2022.
vii. The following balances appeared in the books of Magwitch Incorporated on 31 January 2022:
Bank (favourable) $ 611 244,00
Debtors $ 205 312,00
Creditors $ 180 099,00
viii. Credit sales were as follows during the previous budget period:
November 2021 $ 180 099,00
December 2021 $ 108 059,00
January 2022 $ 144 079,00
Prepare Sandwich Incorporated monthly cash budget for February, March and April 2022.
Cash budget for .
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| February. | March. | April. |
| Opening Cash Balance |
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| Total cash available |
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Closing cash balance |
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