Now or Never Ltd, a fashion retailer, has appointed you as a consultant to prepare a cash budget for the period ending 31 May 2023. Actual results for January and February 2023 and projections for March to May 2023 are presented as follows: Sales Purchases Wages Salary Telephone and internet Rent Other operating expense (including depreciation) January 1 500 000 700 000 Additional information: - 300 000 200 000 5100 200 000 200 000 February 1 650 000 800 000 320 000 200 000 5250 200 000 205 000 March 1 750 000 900 000 350 000 200 000 5400 200 000 April 1 800 000 1 050 000 ? 200 000 5 500 200 000 210 000 215 000 May 2 000 000 1 250 000 ? 200 000 5 500 200 000 220 000 Income earned and expenses incurred are shown above. Cash sales amount to 20% of all sales; the balance is on credit Credit customers pay 40% in 30 days after the month of sale and the balance in 60 days after the sale. All goods are bought on credit; suppliers are paid at the end of the month of purchase but are granted a 10% discount for early settlement. Wages for April are expected to increase by 10% compared to the previous month and 12% in May compared to April. Wages, telephone and internet expenses are paid exactly one month after they are incurred. Salaries and rent expenses are paid on the last day of the month. Other operating expenses are paid one month after they are incurred and include a fixed amount of R50 000 per month for depreciation. The company had a positive bank balance of R44 702 on 1 April 2023.
Now or Never Ltd, a fashion retailer, has appointed you as a consultant to prepare a cash budget for the period ending 31 May 2023. Actual results for January and February 2023 and projections for March to May 2023 are presented as follows: Sales Purchases Wages Salary Telephone and internet Rent Other operating expense (including depreciation) January 1 500 000 700 000 Additional information: - 300 000 200 000 5100 200 000 200 000 February 1 650 000 800 000 320 000 200 000 5250 200 000 205 000 March 1 750 000 900 000 350 000 200 000 5400 200 000 April 1 800 000 1 050 000 ? 200 000 5 500 200 000 210 000 215 000 May 2 000 000 1 250 000 ? 200 000 5 500 200 000 220 000 Income earned and expenses incurred are shown above. Cash sales amount to 20% of all sales; the balance is on credit Credit customers pay 40% in 30 days after the month of sale and the balance in 60 days after the sale. All goods are bought on credit; suppliers are paid at the end of the month of purchase but are granted a 10% discount for early settlement. Wages for April are expected to increase by 10% compared to the previous month and 12% in May compared to April. Wages, telephone and internet expenses are paid exactly one month after they are incurred. Salaries and rent expenses are paid on the last day of the month. Other operating expenses are paid one month after they are incurred and include a fixed amount of R50 000 per month for depreciation. The company had a positive bank balance of R44 702 on 1 April 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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Transcribed Image Text:Required:
Using the template provided, draw up the cash budget of Now or Never Ltd for
the months of April and May 2023.
Note: calculations are not required; however, show the details of the cash
collected from credit customers for each of the applicable months.
Cash Budget of Now or Never Ltd
for April and May 2023
April
Cash receipts/money coming in:
Cash payments/money going out:
Cash surplus/(deficit)
Bank balance at the beginning
Bank balance at the end
May
Transcribed Image Text:Now or Never Ltd, a fashion retailer, has appointed you as a consultant to
prepare a cash budget for the period ending 31 May 2023.
Actual results for January and February 2023 and projections for March to May
2023 are presented as follows:
Sales
Purchases
Wages
Salary
Telephone and
internet
Rent
Other operating
expense (including
depreciation)
January
1 500 000
700 000
300 000
200 000
Additional information:
5 100
200 000
200 000
February
1 650 000
800 000
320 000
200 000
5 250
200 000
205 000
March
1 750 000
900 000
350 000
200 000
5 400
200 000
210 000
April
1 800 000
1 050 000
?
200 000
5 500
200 000
215 000
May
2 000 000
1 250 000
?
200 000
5 500
200 000
220 000
Income earned and expenses incurred are shown above.
Cash sales amount to 20% of all sales; the balance is on credit
Credit customers pay 40% in 30 days after the month of sale and the
balance in 60 days after the sale.
All goods are bought on credit; suppliers are paid at the end of the
month of purchase but are granted a 10% discount for early
settlement.
Wages for April are expected to increase by 10% compared to the
previous month and 12% in May compared to April.
Wages, telephone and internet expenses are paid exactly one month
after they are incurred.
Salaries and rent expenses are paid on the last day of the month.
Other operating expenses are paid one month after they are incurred
and include a fixed amount of R50 000 per month for depreciation.
The company had a positive bank balance of R44 702 on 1 April 2023.
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