Nana Adom Company Limited is a wholesale company that deals in general goods. the following information relates to the last quarter of the year 2021. Expenses: (GH¢) 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. A contingent liability of GH¢ 10,000 is expected to mature in November Estimated cash balance at the end of september will be GH¢5,000. 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. The sales manager's salary, which is GH¢7,000 per month, is expected to increase by GH¢1,000 every month after june. Motor vehicle will be purchased in Novemebr for GH¢240,000. Depreciation for motor van should be calculated at 10% in december. Credit purchases have been budgeted as follows; September GH¢200,000 October GH¢240,000 Novemeber GH¢200,000 December GH¢300,000 75% of purchases are paid for in the month of purchase and the remainder in the month after purchase. Details of expected sales (in units) are given below; August 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 GH¢30. Cash sales is expected to be made as follows: August GH¢140,000 Septemeber GH¢100,000 October GH¢200,000 November GH¢120,000 December GH¢140,000 The pattern for the collection of debts from customers is expected to be as follows; 60% in the month of sales (3% cash discounts allowed). 20% in the first month after the month sale. 15% in the second month after the month of sale. 5% is usually regarded as bad debt. Excess funds are invested (in multiples of GH¢10,000) in short term securities, at an interest rate of 20% per annum. Borrowing must be paid together with any accrued interest whenever funds are available Required: Prepare cash budget, for the three month october to december, 2021 showing cash balance at the end of December.
Nana Adom Company Limited is a wholesale company that deals in general goods. the following information relates to the last quarter of the year 2021.
Expenses: (GH¢)
October November December
Selling & Distribution 20,000 30,000 34,000
General & Administration 15,000 18,000 12,000
Rate 8,000 6,000 10,000
Interest charges 1,600 2,000 2,400
Expenses are payable in the month of incurrence.
A
Estimated cash balance at the end of september will be GH¢5,000. 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.
The sales manager's salary, which is GH¢7,000 per month, is expected to increase by GH¢1,000 every month after june.
Motor vehicle will be purchased in Novemebr for GH¢240,000. Depreciation for motor van should be calculated at 10% in december.
Credit purchases have been budgeted as follows;
September GH¢200,000
October GH¢240,000
Novemeber GH¢200,000
December GH¢300,000
75% of purchases are paid for in the month of purchase and the remainder in the month after purchase.
Details of expected sales (in units) are given below;
August 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 GH¢30.
Cash sales is expected to be made as follows:
August GH¢140,000
Septemeber GH¢100,000
October GH¢200,000
November GH¢120,000
December GH¢140,000
The pattern for the collection of debts from customers is expected to be as follows;
60% in the month of sales (3% cash discounts allowed).
20% in the first month after the month sale.
15% in the second month after the month of sale.
5% is usually regarded as bad debt.
Excess funds are invested (in multiples of GH¢10,000) in short term securities, at an interest rate of 20% per annum.
Borrowing must be paid together with any accrued interest whenever funds are available
Required:
Prepare
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