A company is in the process of preparing a cash budget for January to March 2024. The company has actual sales in October and November 2023 of GHS 100,000. December sales are expected to remain at this level but a new advertising initiative to be launched on 1 January 2024 are expected to lead to a month on month increase in sales of GHS 10,000 per month for the first 6 months of next year.Cost of sales is budgeted to be 60% of the sales figure in each month. It is the company's policy to have enough closing inventory at each month end to cover 10% of the next month sales. This means that if sales in month 2 are expected to be 100 to closing inventory at the end of month 1 will be 6 being 10% x 100 x 60%. Half of all purchases in each month are paid for in that month and the remaining balance is paid in the next month.

A company is in the process of preparing a cash budget for January to March 2024. The company has actual sales in October and November 2023 of GHS 100,000. December sales are expected to remain at this level but a new advertising initiative to be launched on 1 January 2024 are expected to lead to a month on month increase in sales of GHS 10,000 per month for the first 6 months of next year.Cost of sales is budgeted to be 60% of the sales figure in each month. It is the company's policy to have enough closing inventory at each month end to cover 10% of the next month sales. This means that if sales in month 2 are expected to be 100 to closing inventory at the end of month 1 will be 6 being 10% x 100 x 60%. Half of all purchases in each month are paid for in that month and the remaining balance is paid in the next month.

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter15: Working Capital Management

Section: Chapter Questions

Problem 10P: CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of...

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A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and the remainder are credit sales. The company finds that typically 10 percent of a months credit sales are paid in the month of sale, 70 percent are paid the next month, and 15 percent are paid in the second month after sale. Expected cash receipts in July are budgeted at what amount? a. 114,520 b. 143,150 c. 145,720 d. 156,000
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