Prepare a cash budget for the first quarter of 2021. Clearly show the amounts for cash sales, credit sales, cash purchases, credit purchases and totals
Question #2
Cash budgeting is critical to a company’s financial information needs. The following information was extracted from the records of A & B Manufacturing Company Limited. The opening cash balances on January 01, 2021 was expected to be $30,000. The budgeted sales were as follows:
Budgeted Sales
Month Year $
November 2020 80,000
December 2020 90,000
January 2021 80,000
February 2021 75,000
March 2021 60,000
April 2021 70,000
Analysis of records shows that debtors settle according to the following pattern:
70% within the month of sale
30% the following month
Extracts of the purchases budget were as follows:
Purchases budget
Month Year $
December 2020 65,000
January 2021 50,000
February 2021 75,000
March 2021 70,000
All purchases are on credit and past experience shows that 90% are settled in the month of purchases and the balance settled the month after.
Salary is $15,000 per month
Required:
(c) Prepare a
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