Ronstadt Limited's budget for the four months from January to April includes the following data: 1. Sales S000 615 636 690 Materials S000 115.0 120.0 135.0 Manth Wages S000 30 Overheads $000 360 January February March April 33 36 390 420 425 684 130.0 40 2. Ore-third of salesrevenue is received one month after sale and the remainder is received two months after sale. The sales in the previous two months were: November $600 000; Decenber $540 000. 3. One-quarter of purchases of materials are paid for in the month of purchase. The remainder are paid for two months later. Purchases in the previous two months were: November $108 000; December $106 000. 4. Two-thirds of the wages are paid in the month in which they are eamed, and the balance is paid in the following manth. The wages for the previous December amounted to $30 000. 5. Ore-half of the overhead expenditure is paid in the month in which it is incurred, and the balance is paid in the following month. The overheads for the previaus December were $380 000. 6. Old machinery will be sold for $4000 in April. New machinery will be purchased in March for $90 000 but only one-half of the price will be paid in that month. The balance will be paid in August. 7. Ronstadt Limited has an overdraft of $63 000 at the bank at 31 December.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

100%

Cash budgeting

Ronstadt Limited s budget for the four months from January to April includes the following data:
1.
Materials
$000
O verheads
$000
360
Month
Sales
$000
Wages
$000
January
February
March
April
615
115.0
30
636
120.0
33
390
690
135.0
36
420
684
130.0
40
425
2. Ore-third of sales revenue is received one month after sale and the remainder is received two
months after sale. The sales in the previous two months were: November $600 000;
December $540 000.
3. On-quarter of purchases of materials are paid for in the month of purchase. The remainder
are paid for two months later. Purchases in the previous two months were: November $108 000;
December $106 000.
4. Two-thirds of the wages are paid in the month in which they are eamed, and the balance is
paid in the following manth. The wages for the previous December amounted to $30 000.
5. One-half of the overhead expenditure is paid in the month in which it is incurred, and the
balance is paid in the following month. The overheads for the previaus December were
$380 000.
6. Old machinery will be sold for $4000 in April. New machinery will be purchased in March
for $90 000 but only one-half of the price will be paid in that month. The balance will be paid in
August.
7. Ronstadt Limited has an overdraft of $63 000 at the bank at 31 December.

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

Expert Solution

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions