JL is preparing its cash budget for the next three quarters. The following data have been extracted from the operational budgets: Sales revenue Quarter 1                     OMR 500,000 Quarter 2                     OMR 450,000 Quarter 3                     OMR 480,000 Direct material purchases Quarter 1                     OMR 138,000 Quarter 2                     OMR 151,200 Quarter 3                     OMR 115,600   Additional information is available as follows: JL sells 20% of its goods for cash. Of the remaining sales value, 70% is received within the same quarter as sale and 30% is received in the following quarter. It is estimated that trade receivables will be OMR 125,000 at the beginning of Quarter 1. No bad debts are anticipated.   50% of payments for direct material purchases are made in the quarter of purchase, with the remaining 50% in the quarter following purchase. It is estimated that the amount owing for direct material purchases will be OMR 60,000 at the beginning of Quarter 1.   JL pays labour and overhead costs when they are incurred. It has been estimated that labour and overhead costs in total will be OMR 303,600 per quarter. This figure includes depreciation of OMR 19,600.   JL expects to repay a loan of OMR 100,000 in Quarter 3.   The cash balance at the beginning of Quarter 1 is estimated to be OMR 49,400 positive.   You are required to calculate:- Prepare a cash budget for each of the THREE quarters.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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JL is preparing its cash budget for the next three quarters. The following data have been extracted from the operational budgets:

Sales revenue

Quarter 1                     OMR 500,000

Quarter 2                     OMR 450,000

Quarter 3                     OMR 480,000

Direct material purchases

Quarter 1                     OMR 138,000

Quarter 2                     OMR 151,200

Quarter 3                     OMR 115,600

 

Additional information is available as follows:

  • JL sells 20% of its goods for cash. Of the remaining sales value, 70% is received within the same quarter as sale and 30% is received in the following quarter. It is estimated that trade receivables will be OMR 125,000 at the beginning of Quarter 1. No bad debts are anticipated.

 

  • 50% of payments for direct material purchases are made in the quarter of purchase, with the remaining 50% in the quarter following purchase. It is estimated that the amount owing for direct material purchases will be OMR 60,000 at the beginning of Quarter 1.

 

  • JL pays labour and overhead costs when they are incurred. It has been estimated that labour and overhead costs in total will be OMR 303,600 per quarter. This figure includes depreciation of OMR 19,600.

 

  • JL expects to repay a loan of OMR 100,000 in Quarter 3.

 

  • The cash balance at the beginning of Quarter 1 is estimated to be OMR 49,400 positive.

 

You are required to calculate:-

Prepare a cash budget for each of the THREE quarters.

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