Bemus Ltd is a high street store operating in Bern-On-Sea for the last three years. David Bemus – the CEO is concerened about the company’s liquidity of the business and has asked you to prepare a Budgeted Cash Flow for 4 months ending December 2022. He has provided you with the following: Prepare a monthly cash budget for the FOUR months from 01 September 2022 to 31 December 2022 for Bemus Ltd using the information from the picture below
Bemus Ltd is a high street store operating in Bern-On-Sea for the last three years. David Bemus – the CEO is concerened about the company’s liquidity of the business and has asked you to prepare a Budgeted Cash Flow for 4 months ending December 2022. He has provided you with the following: Prepare a monthly cash budget for the FOUR months from 01 September 2022 to 31 December 2022 for Bemus Ltd using the information from the picture below
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
Bemus Ltd is a high street store operating in Bern-On-Sea for the last three years.
David Bemus – the CEO is concerened about the company’s liquidity of the business and has asked you to prepare a Budgeted Cash Flow for 4 months ending December 2022. He has provided you with the following:
Prepare a monthly cash budget for the FOUR months from 01 September
2022 to 31 December 2022 for Bemus Ltd using the information from the picture below
Transcribed Image Text:Details
Sales
Purchases of
Goods for Resale
Other Overheads
I.
II.
III.
IV.
VI.
Jul-22 Aug -22 Sep-22 Oct-22 Nov-22 Dec-22
£90,000 £80,000 £100,000 £120,000 £85,000 £97,000
Overheads are paid in the month they are incurred.
The annual rent is £156,000 payable quarterly in advance on the first of:
January; April; July; October. On 01 October 2022 the landlord is expected to
exercise the right to increase rent by 10%
V.
In October 2022, Bemus Ltd intends to purchase three delivery vans at a cost of
£22,800 each. He intends to trade in the two older vans he currently owns as
part-payment for the three new vans. The two older vans have a net book value
of £6,000 each. Bemus is expecting this figure to be true at the time of the
trade-in.
£50,000 £39,000 £44,500 £52,000 £45,000 £37,500
£28,500 £23,000 £42,000 £37,500 £26,000 £29,500
All sales are on credit. It is expected that 30% of customers will take advantage
of the cash discount of 2.5% that Bemus Ltd offers and will pay in the month of
sale. Of the remaining 70%, it is expected that half will pay in the month after
sale and the remainder will pay two months after sale.
One supplier of Bemus Ltd, purchases of goods for resale, demands that he is
paid cash immediately. This supplier accounts for 20% of all monthly
purchases. The other suppliers are paid one month after the purchase has
taken place.
4|Page
Bemus Ltd is planning to change the old shop fitting at a total cost of £38,000.
They will buy the shop fittings in September 2022 for £24,000. The installation
cost of £14,000 is to be paid in November 2022 after the fittings have been
completed.
VII. He expects his bank balance to be £26,500 on 31 August 2022.
VIII. Bemus daughter works in the store; she is paid an annual salary of £28,800.
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