19. Hunt Chemicals is preparing a cash budget for June and July 2019. At the end of July 2019, the company has undertaken to repay a £100,000 loan to their bank which had been borrowed in February 2019 to enable the business to survive during the seasonal peak in the second quarter of the calendar year, April to June. The bank balance at 1 June 2019 is expected to be £17,500. Budgeted sales revenues are as follows: April 2019 May 2019 June 2019 July 2019 August 2019 (0) (ii) £360,000 £500,000 £600,000 £300,000 £240,000 Additional information: 70% of sales revenue is expected in the month of sales, subject to a 2% prompt payment discount. 20% of sales revenue is expected in the month following sales. 7% of sales revenue is expected to be received two months after sale and the remainder of sales revenue is expected to be uncollectable. The average selling price per unit is £100 and the average cost price is £75. 50% of the purchase price of goods is expected to be paid in the month of purchase and 50% in the following month. Target closing inventory is equal to the cost of goods sold in the following month plus 25%

19. Hunt Chemicals is preparing a cash budget for June and July 2019. At the end of July 2019, the company has undertaken to repay a £100,000 loan to their bank which had been borrowed in February 2019 to enable the business to survive during the seasonal peak in the second quarter of the calendar year, April to June. The bank balance at 1 June 2019 is expected to be £17,500. Budgeted sales revenues are as follows: April 2019 May 2019 June 2019 July 2019 August 2019 (0) (ii) £360,000 £500,000 £600,000 £300,000 £240,000 Additional information: 70% of sales revenue is expected in the month of sales, subject to a 2% prompt payment discount. 20% of sales revenue is expected in the month following sales. 7% of sales revenue is expected to be received two months after sale and the remainder of sales revenue is expected to be uncollectable. The average selling price per unit is £100 and the average cost price is £75. 50% of the purchase price of goods is expected to be paid in the month of purchase and 50% in the following month. Target closing inventory is equal to the cost of goods sold in the following month plus 25%

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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