An extract from the accounts of Achimota Ltd for the last quarter of 2022 is as follows: GH¢ GH¢ Current Asset Inventory 15,000 Debtors: November 20,000 December 19,000 39,000 Cash in hand and at Bank 24,150 Current Liabilities Creditors (raw materials) Owings 20,050 3,600 Additional Information: i) The following are the relevant data for the company for 2023 January February March April Sales units 50,000 60,000 70,000 80,000 Purchase of raw materials (in kgs) 25,000 35,000 40,000 40,000 Production units 45,000 60,000 68,000 80,000 Fixed Overheads GH¢5,000 GH¢5,000 GH¢5,000 GH¢5,000 The selling price for the products is expected to be GH¢2.5 for the first quarter of 2023. Generally, 60% of sales is collected in the month of sale while 35% is collected in the following month, with the remaining debts declared as bad thereon. The company introduced a debt recovery strategy in the third quarter of 2022 which yielded a collection of 75% of outstanding debts in the first month after being declared as bad debt. ii) One kilogramme of the raw material can be used to produce two products. A kilogramme of the raw material cost GH¢1.30. Due to an anticipated shortage in raw materials, the company plans to pay for all purchases of raw materials, one month ahead of time. iii) Wages and variable production overheads are charged at GH¢0.50 and GH¢0.25 respectively per unit produced. Wages and all overheads are paid in the month in which they are incurred. Included in fixed overheads is a monthly depreciation of GH¢750. All other owings are due for payment in the month of January. Required: Prepare the monthly cash budget for the first quarter of 2023, showing the sub-totals.
An extract from the accounts of Achimota Ltd for the last quarter of 2022 is as follows: GH¢ GH¢ Current Asset Inventory 15,000 Debtors: November 20,000 December 19,000 39,000 Cash in hand and at Bank 24,150 Current Liabilities Creditors (raw materials) Owings 20,050 3,600 Additional Information: i) The following are the relevant data for the company for 2023 January February March April Sales units 50,000 60,000 70,000 80,000 Purchase of raw materials (in kgs) 25,000 35,000 40,000 40,000 Production units 45,000 60,000 68,000 80,000 Fixed Overheads GH¢5,000 GH¢5,000 GH¢5,000 GH¢5,000 The selling price for the products is expected to be GH¢2.5 for the first quarter of 2023. Generally, 60% of sales is collected in the month of sale while 35% is collected in the following month, with the remaining debts declared as bad thereon. The company introduced a debt recovery strategy in the third quarter of 2022 which yielded a collection of 75% of outstanding debts in the first month after being declared as bad debt. ii) One kilogramme of the raw material can be used to produce two products. A kilogramme of the raw material cost GH¢1.30. Due to an anticipated shortage in raw materials, the company plans to pay for all purchases of raw materials, one month ahead of time. iii) Wages and variable production overheads are charged at GH¢0.50 and GH¢0.25 respectively per unit produced. Wages and all overheads are paid in the month in which they are incurred. Included in fixed overheads is a monthly depreciation of GH¢750. All other owings are due for payment in the month of January. Required: Prepare the monthly cash budget for the first quarter of 2023, showing the sub-totals.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:An extract from the accounts of Achimota Ltd for the last quarter of 2022 is as follows:
GH¢
GH¢
Current Asset
Inventory
15,000
Debtors:
November
20,000
December
19,000
39,000
Cash in hand and at Bank
24,150
Current Liabilities
Creditors (raw materials)
Owings
20,050
3,600
Additional Information:
i) The following are the relevant data for the company for 2023
January
February
March
April
Sales units
50,000
60,000
70,000
80,000
Purchase of raw materials (in kgs)
25,000
35,000
40,000
40,000
Production units
45,000
60,000
68,000
80,000
Fixed Overheads
GH¢5,000
GH¢5,000
GH¢5,000 GH¢5,000
The selling price for the products is expected to be GH¢2.5 for the first quarter of 2023.
Generally, 60% of sales is collected in the month of sale while 35% is collected in the following
month, with the remaining debts declared as bad thereon.
The company introduced a debt recovery strategy in the third quarter of 2022 which yielded a
collection of 75% of outstanding debts in the first month after being declared as bad debt.
ii) One kilogramme of the raw material can be used to produce two products. A kilogramme of the
raw material cost GH¢1.30.
Due to an anticipated shortage in raw materials, the company plans to pay for all purchases of raw
materials, one month ahead of time.
iii) Wages and variable production overheads are charged at GH¢0.50 and GH¢0.25 respectively
per unit produced.
Wages and all overheads are paid in the month in which they are incurred. Included in fixed
overheads is a monthly depreciation of GH¢750.
All other owings are due for payment in the month of January.
Required:
Prepare the monthly cash budget for the first quarter of 2023, showing the sub-totals.
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