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 September2022 to 31 December 2022 for Bemus Ltd using the information from the picture below DetailsSalesPurchases ofGoods for ResaleOther OverheadsI.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 £97,000Overheads 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 toexercise 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 aspart-payment for the three new vans. The two older vans have a net book valueof £6,000 each. Bemus is expecting this figure to be true at the time of thetrade-in.£50,000 £39,000 £44,500 £52,000 £45,000 £37,500£28,500 £23,000 £42,000 £37,500 £26,000 £29,500All sales are on credit. It is expected that 30% of customers will take advantageof the cash discount of 2.5% that Bemus Ltd offers and will pay in the month ofsale. Of the remaining 70%, it is expected that half will pay in the month aftersale and the remainder will pay two months after sale.One supplier of Bemus Ltd, purchases of goods for resale, demands that he ispaid cash immediately. This supplier accounts for 20% of all monthlypurchases. The other suppliers are paid one month after the purchase hastaken place.4|PageBemus 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 installationcost of £14,000 is to be paid in November 2022 after the fittings have beencompleted.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.

Cash Budget: A cash budget is an internal document of the company that records budgeted receipts and…

Answered: Bemus Ltd is a high street store…

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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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

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.

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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