HH Company is in the process of preparing the cash budget for the last four months of 2022 that is September to December. The following information has been made available. SeptOctNovDecProjected sales quantity (units)60,00065,00065,00070,000 Additional information:Selling price is ksh 120 per unit but expected to drop by 5% from 1stPayment for goods sold is as follows;20% in the month of sales,70% the following month after sales andThe balance in the second month after sales. Bad debt is estimated at 3% of sales value.Purchases of goods at ksh 65 per unit are as follows: September 88,000 units,October 84,000 units,November 95,000 units andDecember 80,000 units.Goods purchased are paid one month in arrears.Monthly expenses estimated at 15% on sales revenue are paid in the month of incurrence.The company plans to buy a delivery van at ksh 2,700,000, 40% of the cost to be paid in October and the balance in January 2023.The Director withdraws ksh 350,000 monthly for personal expenses.Extracts from August figures are as follows:Debtors ksh 6,600,000 out of which ksh 1,800,000 is part of July sales before bad debtCreditors for goods ksh 5,200,000Cash ksh 1,050,000Required:Prepare Monthly cash budget for the three months ending December 2022

Cash Budget is prepared to record all the cash related data. It is an estimation of companies cash…

Answered: mber to December. The following…

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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HH Company is in the process of preparing the cash budget for the last four months of 2022 that is September to December. The following information has been made available.

	Sept	Oct	Nov	Dec
Projected sales quantity (units)	60,000	65,000	65,000	70,000

Additional information:

Selling price is ksh 120 per unit but expected to drop by 5% from 1^st
Payment for goods sold is as follows;

20% in the month of sales,
70% the following month after sales and
The balance in the second month after sales.

Bad debt is estimated at 3% of sales value.
Purchases of goods at ksh 65 per unit are as follows:

September 88,000 units,
October 84,000 units,
November 95,000 units and
December 80,000 units.

Goods purchased are paid one month in arrears.
Monthly expenses estimated at 15% on sales revenue are paid in the month of incurrence.
The company plans to buy a delivery van at ksh 2,700,000, 40% of the cost to be paid in October and the balance in January 2023.
The Director withdraws ksh 350,000 monthly for personal expenses.
Extracts from August figures are as follows:

Debtors ksh 6,600,000 out of which ksh 1,800,000 is part of July sales before bad debt
Creditors for goods ksh 5,200,000
Cash ksh 1,050,000

Required:

Prepare Monthly cash budget for the three months ending December 2022

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