Tools View Document1 - Word - 0 Cash Budget: Heartcare Ltd A cash budget is required between July to the 31st of December. Comment on the outcome of the budget of heartcare itd. These are the conditions you must adhere to: 1. The cash balance on July 1 is 42,000. 2. In October new plant will be purchased for 38,000. Government grants on this plant will be received in November amounting to 6,000. 3. Corporation tax of 6,000 is to be paid in October. 4. Clerical wages and expenses are paid in the month in which they occur. 5. Advertising and Stationary is paid monthly taking one month's credit. 6. Salesmen's commission is paid one month in arrears. 7. Sales income is split 50:50 as to cash and credit. On average, debtors take two months' credit. 10 July Aug Sept Oct Nov Dec (000s) (000s) (000s) (000s) (000s) (000s) 40 50 60 80 100 90 8 10 10 2 28 28 20 Materials Used Depr of Plant Factory Expenses Rent & Rates Office Expenses Advertising & Stationary Wages Sales Commission 20 14 138 120 70 161 140 80 10 180 240 100 156 160 90 8. The taxation provision for the 6 months can be taken at 40,000 payable in full in December of next year. 12 220 280 80 201 250 60 Sales Income Raw Materials Stock@ end of month This question carries 25 marks. End of document I 9. Rent and Rates are paid quarterly on the first day of January, April, July and October 10. Factory expenses are paid in the month that they are incurred. 11. Suppliers of materials are paid on average a month after delivery of goods 12. The lag in the payment of wages is one week (assume 4 weeks per month). 13. a. Materials used in June were 40,000. b. Advertising and stationary in June amounted to 12,000. c. Wages in June amounted to 30,000. d. Salesmen's commission earned in June amounted to 4,000. e. Sales income was 80,000 in both May and June. f. Raw material stocks at the end of May amounted to 60,000 similar to those on hand at the end of June. Requirement: E - D Focus PE A 1417 . 1 6 ENG 03/05/2020 Sens 1-2 of 2 Type here to search