Carl Company Limited is a wholesale company that deals in general goods. The following information relates to the next budget period. 1. Expenses: (in GHe) October November December Selling & distribution 20,000 30,000 34,000 General & administration 15,000 18,000 12,000 Bad debts 21,000 15,000 20,000 Rate 8,000 6,000 10,000 Interest charges 1,600 2,000 2,400 Depreciation expenses 30,000 10,000 10,000 Expenses are payable in the month of incurrence. 2. A cantingent liability of GHe10,000 is expected to manure in November 3. Estimated cash balance at the end of September will be GHE5000. Cash balances should not be less than GHE110,000. Cash can be barrowed in multiples of GH¢10,000 to finance any deficit at an interest rate of 15% per annum. 4. The sales manager's salary, which is GHe 7000 per month is expected to increase by GHE1000 every month after June. 5. Motor vehicle will be purchased in November at GH2240,000. Depreciation for motor van should be calculated at 10% in December. 6. Credit purchases have been made as follows: September GHE200,000 October GH:240,000 November GH:200,000 December GHE300,000 75% of purchases are paid for in the month of purchase and the remainder in the month after purchase. 7. Details of expected sales (in umits) are given below:
Carl Company Limited is a wholesale company that deals in general goods. The following information relates to the next budget period. 1. Expenses: (in GHe) October November December Selling & distribution 20,000 30,000 34,000 General & administration 15,000 18,000 12,000 Bad debts 21,000 15,000 20,000 Rate 8,000 6,000 10,000 Interest charges 1,600 2,000 2,400 Depreciation expenses 30,000 10,000 10,000 Expenses are payable in the month of incurrence. 2. A cantingent liability of GHe10,000 is expected to manure in November 3. Estimated cash balance at the end of September will be GHE5000. Cash balances should not be less than GHE110,000. Cash can be barrowed in multiples of GH¢10,000 to finance any deficit at an interest rate of 15% per annum. 4. The sales manager's salary, which is GHe 7000 per month is expected to increase by GHE1000 every month after June. 5. Motor vehicle will be purchased in November at GH2240,000. Depreciation for motor van should be calculated at 10% in December. 6. Credit purchases have been made as follows: September GHE200,000 October GH:240,000 November GH:200,000 December GHE300,000 75% of purchases are paid for in the month of purchase and the remainder in the month after purchase. 7. Details of expected sales (in umits) are given below:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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:Carl Company Limited is a wholesale company that deals in general goods. The following
information relates to the next budget period.
1. Expenses: (in GHe)
October
November
December
Selling & distribution
20,000
30,000
34,000
General & administration
15,000
18,000
12,000
Bad debts
21,000
15,000
20,000
Rate
8,000
6,000
10,000
Interest charges
1,600
2,000
2,400
Depreciation expenses
30,000
10,000
10,000
Expenses are payable in the month of incurrence.
2. A contingent liability of GH¢10,000 is expected to mature in November
3. Estimated cash balance at the end of September will be GH¢5000. Cash balances should
not be less than GH¢10,000. Cash can be borrowed in multiples of GH¢10,000 to finance
any deficit at an interest rate of 15% per annum.
4. The sales manager's salary, which is GHe 7000 per month is expected to increase by
GHE1000 every month after June.
5. Motor vehicle will be purchased in November at GH¢240,000. Depreciation for motor van
should be calculated at 10% in December.
6. Credit purchases have been made as follows:
September
GH¢200,000
October
GH¢ 240,000
November
GHe200,000
December
GHE300,000
75% of purchases are paid for in the month of purchase and the remainder in the month
after purchase.
7. Details of expected sales (in umits) are given below.
Transcribed Image Text:Angust 20,000
September
18,000
October
21,000
November
15,000
December
20,000
Sales are likely to be made at a unit price of GHe 30.
8. Cash sales is expected to be made as follows: August GH¢140,000
September
GH¢100,000
October
GHe200,000
November
GH¢120,000
December
GHE140,000
The pattem for the collection of debts from customers is expected to be as follows:
a 60% in the month of sales (3% cash discount allowed).
b. 20% in the first month after the month of sale.
c 15% in the second month after the month of sale.
d. 5% is usually regarded as bas debt
9. Excess funds are invested (in multiples of GHe10,000) in short term securities, at an
interest rate of 20% per annum.
10. Borrowing must be paid together with any accrued interest whenever funds are available.
Required
Prepare cash budget, for the three moath, from October to December showing cash balance at the
end of December.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 7 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education