Pierce Ltd. specializes in the manufacture of dry cider. The one litre bottle sells for GH(13.00 each. with 25% of sales on cash terms and 75% on one month's credit. The budget shows the following sales volumes. Month Litres August 400.000 September 340.000 October 300.000 November 260.000 December 320.000 January 250.000   The company’s    police    is for opening   inventory   of cider  to  equal   one-fifth   of  each  month's  sales,  but the inventory   of cider  on 1 September   was  actually   80.000  litres,   For  inventories   of apples,   the  policy   is  for  opening     inventory    to  equal     50%   of  each   month's   usage.   On  1 September,   the  inventory   of apples   was  actually  2.200  tonnes. On average.  15 kilogrammes   of apples   are  needed    to produce   l  litre of cider     11  tonne=    l.000 kg). The  cost  price  of apples   is GHc50  tonne  in  September    and  October    but GH l50  tonne   in September    and  October   but  GH 150 tonne  in  November,    and  December   as they  have   to  be imported.   Direct   depreciation).     Payment   for apples  is made  two  months  after  purchase   but all other  expenses   are paid  for one   month    after being  incurred. Requird For November only, prepare the cash budget. (Assume the bank balance on 1 November, is GH 495.900 overdrawn.)

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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Pierce Ltd. specializes in the manufacture of dry cider. The one litre bottle sells for GH(13.00 each. with 25% of sales on cash terms and 75% on one month's credit. The budget shows the following sales volumes.

Month

Litres

August

400.000

September

340.000

October

300.000

November

260.000

December

320.000

January

250.000

 

The company’s    police    is for opening   inventory   of cider  to  equal   one-fifth   of  each  month's  sales,  but the inventory   of cider  on 1 September   was  actually   80.000  litres,   For  inventories   of apples,   the  policy   is  for  opening     inventory    to  equal     50%   of  each   month's   usage.   On  1 September,   the  inventory   of apples   was  actually  2.200  tonnes.

On average.  15 kilogrammes   of apples   are  needed    to produce   l  litre of cider     11  tonne=    l.000 kg). The  cost  price  of apples   is GHc50  tonne  in  September    and  October    but GH l50  tonne   in September    and  October   but  GH 150 tonne  in  November,    and  December   as they  have   to  be imported.   Direct   depreciation).     Payment   for apples  is made  two  months  after  purchase   but all other  expenses   are paid  for one   month    after being  incurred.

Requird

  1. For November only, prepare the cash budget. (Assume the bank balance on 1 November, is GH 495.900 overdrawn.)                                                                                  
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