ABC Company has a cash balance of $75,000 at the beginning of March and having regard to the following information: i. Creditors give 1-month credit ii. Salaries are paid in the current month iii. Fixed overheads are paid one month in arrears and include a charge for depreciation of $5,000 per month iv. Variable overheads are paid two months in arrears v. Credit sales are settled as follows: 40% in the month of sale, 45% in the next month and 12% in the following month. The balance represents bad debts. Month Cash Sales Credit Sales Purchases $ $ 74,000 82,000 80,000 90,00 0 100,000 $ January February March 20,000 22,000 25,000 55,200 61,200 60,000 69,000 75,000 April Мay Salaries Fixed Overheads Variable Overhead January February March 9,000 9,000 9,500 9,500 10 ,000 30,000 30,000 30,000 32,000 32,000 45,000 50,000 55,000 60,000 70,000 Аpril Мay
ABC Company has a cash balance of $75,000 at the beginning of March and having regard to the following information: i. Creditors give 1-month credit ii. Salaries are paid in the current month iii. Fixed overheads are paid one month in arrears and include a charge for depreciation of $5,000 per month iv. Variable overheads are paid two months in arrears v. Credit sales are settled as follows: 40% in the month of sale, 45% in the next month and 12% in the following month. The balance represents bad debts. Month Cash Sales Credit Sales Purchases $ $ 74,000 82,000 80,000 90,00 0 100,000 $ January February March 20,000 22,000 25,000 55,200 61,200 60,000 69,000 75,000 April Мay Salaries Fixed Overheads Variable Overhead January February March 9,000 9,000 9,500 9,500 10 ,000 30,000 30,000 30,000 32,000 32,000 45,000 50,000 55,000 60,000 70,000 Аpril Мay
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:ABC Company has a cash balance of $75,000 at the beginning of March and having regard to the
following information:
Creditors give l-month credit
ii. Salaries are paid in the current month
iii. Fixed overheads are paid one month in arrears and include a charge for depreciation of
$5,000 per month
iv. Variable overheads are paid two months in arrears
v. Credit sales are settled as follows: 40% in the month of sale, 45% in the next month and 12%
in the following month. The balance represents bad debts.
i.
Month
Cash Sales
Credit Sales
Purchases
$
$
74,000
82,000
80,000
$
55,200
January
February
March
20,000
22,000
25,000
61,200
60,000
69,000
75,000
April
Мay
90,00 0
100,000
Salaries
Fixed Overheads
Variable Overhead
進 推 調
January
February
March
9,000
9,000
9,500
30,000
30,000
30,000
45,000
50,000
55,000
April
Мay
9,500
10 ,000
32,000
32,000
60,000
70,000
АССТ3603
Required:
А.
Prepare the Debtors Collection Schedule for ABC company for March to May.
В.
Prepare the Cash Budget for April and May.
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