7. The company plans to spend ZMW 10,000 on marketing and advertising inJanuary 2023 and a further ZMW5, 000 in the same area in March 2023.8. Administration overheads are budgeted at ZMW500 per month: 60% is paid in themonth of usage and the balance one month later.9. Fixed assets will be depreciated at 25% per annum of the initial investment capital.Required:i) Prepare the Cash Budget by month for the first quarter of 2016.Identify and comment on those areas of the cash budget that you wish to draw to theattention of management and recommend action to be taken. QUESTION ONEZambeka limited is a modern company that offers customised products to its clients. Thecompany has received some seed fund (cash) that will be used as equity capitalamounting to ZMW150, 000 on January 1 2023.You have just been engaged by the company to prepare a cash budget for the first threemonths of the 2023 using the information given below:1. The Budgeted sales for the first quarter of 2023 are expected to be ZMW240,000.Since the company will be launching the same year, sales are expected togradually pick as product awareness increases. It is assumed that 15% of the firstquarter sales will be in January, 30% in February and the remainder in March. Ifthese projections hold it is anticipated that annual sales in 2023 will be ZMW1,000,000.2. Clients must pay a deposit of 5% of the price when the order is made. Paymentsof 45% and 50% of the der pricemonth one an month twobe paidfollowing the month of sale. The company does not plan for any defaultingcustomers (Bad Debts).3. The company will employ six staff and each will be paid ZMW4,500 at the end ofeach month.4. The company plans to procure materials for the jobs for a value of ZMW 100,000in January. A deposit of 25% is payable on collections and the balance is paid inequal instalments in February and March.5. The company will rent offices at a cost of ZMW6, 500 per month paid three monthsin advance at the start of the lease contract. The landlord charges a securitydeposit of 10% for each of three month's rent.6. The production costs are paid in the month they are incurred and have been budgetas follows:JanuaryFebruaryMarchZMW 1,300ZMW 4,200ZMW 8,000

A Cash budget is a plan of the cash inflows and cash outflows over a period of time. A Cash budget…

Required: i) Prepare the Cash Budget by month for the first quarter of 2016. Identify and comment on those areas of the cash budget that you wish to draw to the attention of management and recommend action to be taken.

Required: i) Prepare the Cash Budget by month for the first quarter of 2016. Identify and comment on those areas of the cash budget that you wish to draw to the attention of management and recommend action to be taken.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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