1. Al Mohsin LLC expects to have RO 8,000 cash balance at the beginning of April. 2. Period of credit allowed by suppliers – 2 months 3. 40% of the total sale is for cash. Half of the credit sale is collected in the next month of sale and the remaining half in the following month after that. 4. Delay in payment of wages 1/4 month 5. Delay in payment of expenses 1/2 month 6. Income tax to be paid in the month of June RO 1,500. You are required to : a. Prepare an estimate of cash position for three months from April to June. b. Based on the budget prepared, evaluate the cash position of the company, give your comments and provide suitable suggestion to the management on effective cash management.

1. Al Mohsin LLC expects to have RO 8,000 cash balance at the beginning of April. 2. Period of credit allowed by suppliers – 2 months 3. 40% of the total sale is for cash. Half of the credit sale is collected in the next month of sale and the remaining half in the following month after that. 4. Delay in payment of wages 1/4 month 5. Delay in payment of expenses 1/2 month 6. Income tax to be paid in the month of June RO 1,500. You are required to : a. Prepare an estimate of cash position for three months from April to June. b. Based on the budget prepared, evaluate the cash position of the company, give your comments and provide suitable suggestion to the management on effective cash management.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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