Problem 5 (Preparation of Cash Budget) The sales forecast for January to May 20X4 and actual sales for November and December 20X3 for Purple Company are as follows: Month November December Sales (P) 80,000 70,000 Actual (20X3) 80,000 100,000 80,000 100,000 90,000 Forecast (20x4) January February March April Мay The 20% of sales is in cash and the rest is on credit, payment on which is realized on the third month. The following other information are also available. a. Amount of purchase is budgeted at 60% of the sales turnover of a month and paid on the third month of purchase. b. Variable expenses is 5% of turnover – time lag of payment half month. Commission on credit sales at 5% is payable on the third month. d. Rent and other expenses amounting to P3,000 paid every month. e. Payment for purchase of fixed assets amounting to P50,000 on March 20X4. f. Payment for taxes on April 20X4 amounting to P20,000. There will be an opening cash balance of P25,000. C. g.
Problem 5 (Preparation of Cash Budget) The sales forecast for January to May 20X4 and actual sales for November and December 20X3 for Purple Company are as follows: Month November December Sales (P) 80,000 70,000 Actual (20X3) 80,000 100,000 80,000 100,000 90,000 Forecast (20x4) January February March April Мay The 20% of sales is in cash and the rest is on credit, payment on which is realized on the third month. The following other information are also available. a. Amount of purchase is budgeted at 60% of the sales turnover of a month and paid on the third month of purchase. b. Variable expenses is 5% of turnover – time lag of payment half month. Commission on credit sales at 5% is payable on the third month. d. Rent and other expenses amounting to P3,000 paid every month. e. Payment for purchase of fixed assets amounting to P50,000 on March 20X4. f. Payment for taxes on April 20X4 amounting to P20,000. There will be an opening cash balance of P25,000. C. g.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 5 (Preparation of Cash Budget)
The sales forecast for January to May 20X4 and actual sales for November and December 20X3 for Purple
Company are as follows:
Month
November
Sales (P)
80,000
70,000
Actual (20X3)
December
Forecast (20X4)
January
February
March
80,000
100,000
80,000
100,000
90,000
April
May
The 20% of sales is in cash and the rest is on credit, payment on which is realized on the third month. The
following other information are also available.
a. Amount of purchase is budgeted at 60% of the sales turnover of a month and paid on the third
month of purchase.
b. Variable expenses iş 5% of turnover – time lag of payment half month.
c. Commission on credit sales at 5% is payable on the third month.
d.
Rent and other expenses amounting to P3,000 paid every month.
e. Payment for purchase of fixed assets amounting to P50,000 on March 20X4.
f. Payment for taxes on April 20X4 amounting to P20,000.
g. There will be an opening cash balance of P25,000.
Required:
a. Prepare a cash budget for five months from January to May 20XS.
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