Simone Limited distributes specialist wines on wholesale basis to its customers. Some of his sales will be for cash from a shop that he intends to rent. It also plans to sell some wine on credit to local restaurants and hotels. The details of his business plan are as follows: It will rent a shop for GH¢10,000 per annum payable quarterly in The landlord also requires a deposit of GH¢5,000 to be paid when the rental starts in June. It will invest GH¢12,000 from its own savings and a bank will loan it GH¢8,000. Interest is to be charged at a rate of 5% per annum payable It will purchase and pay for GH¢12,000 of wine in June and To maintain that level of stock, he will continuously purchase wine to replace what is sold. Suppliers will allow one month’s credit and credit customers will expect one month’s Sales levels are predicted to be: Total sales GH¢ Cash sales GH¢ Credit sales GH¢ June 6,000 3,000 3,000 July 6,500 3,000 3,500 August 7,000 3,000 4,000 September 8,000 3,500 4,500 October 9,500 4,500 5,000 November 12,000 5,000 7,000 Wine will be sold at a gross profit margin of 20%. It intends to withdraw GH¢500 per month for private use and will employ a part-time assistant for GH¢400 per It will need to purchase and install shelving that will be delivered and paid for at the beginning of June at a cost of GH¢3,800. It will also lease a van at a cost of GH¢450 per Other anticipated costs are: GH¢ June 500 July 380 August 400 September 500 October 550 November 600 Required Prepare a cash budget for Simone Limited for first 6 months’ trading to 30 November

Simone Limited distributes specialist wines on wholesale basis to its customers. Some of his sales will be for cash from a shop that he intends to rent. It also plans to sell some wine on credit to local restaurants and hotels. The details of his business plan are as follows: It will rent a shop for GH¢10,000 per annum payable quarterly in The landlord also requires a deposit of GH¢5,000 to be paid when the rental starts in June. It will invest GH¢12,000 from its own savings and a bank will loan it GH¢8,000. Interest is to be charged at a rate of 5% per annum payable It will purchase and pay for GH¢12,000 of wine in June and To maintain that level of stock, he will continuously purchase wine to replace what is sold. Suppliers will allow one month’s credit and credit customers will expect one month’s Sales levels are predicted to be: Total sales GH¢ Cash sales GH¢ Credit sales GH¢ June 6,000 3,000 3,000 July 6,500 3,000 3,500 August 7,000 3,000 4,000 September 8,000 3,500 4,500 October 9,500 4,500 5,000 November 12,000 5,000 7,000 Wine will be sold at a gross profit margin of 20%. It intends to withdraw GH¢500 per month for private use and will employ a part-time assistant for GH¢400 per It will need to purchase and install shelving that will be delivered and paid for at the beginning of June at a cost of GH¢3,800. It will also lease a van at a cost of GH¢450 per Other anticipated costs are: GH¢ June 500 July 380 August 400 September 500 October 550 November 600 Required Prepare a cash budget for Simone Limited for first 6 months’ trading to 30 November

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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Prepare a cash budget for Simone Limited for first 6 months’ trading to 30 November

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.

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	Total sales GH¢	Cash sales GH¢	Credit sales GH¢
June	6,000	3,000	3,000
July	6,500	3,000	3,500
August	7,000	3,000	4,000
September	8,000	3,500	4,500
October	9,500	4,500	5,000
November	12,000	5,000	7,000