The directors of Royal Ltd have asked you, as a recently employed assistant management accountant, to prepare and review their cash budget. In addition, Royal Ltd requires you to evaluate the different funding options for its expansion plans. Estimated sales and purchases for each of the nine months to September are given below: Jan £,000 Feb £,000 Mar £,000 April £,000 May £,000 June £,000 July £,000 Aug £,000 Sept £,000 Credit sales 2,500 4,000 3,000 16,000 11,350 18,000 14,250 7,500 12,500 Cash sales 550 650 900 900 220 100 300 550 800 Credit purchases 5,000 3,200 6,800 7,000 3,700 4,300 2,200 1,000 5,100 Trade Receivables: Credit sales are to be collected two months after the date they have been sold. Trade Payables: Credit purchases are to be paid one month after the date they have been purchased. Borrowings: The terms of a 5-year loan are coming to an end and Hamble Ltd are due to repay the capital of £5,000,000 on 31st July. Current Liabilities: Corporation tax of £100,000 is due to be paid to HMRC in the month of May. Delivery vehicles: Hamble Ltd has a policy of replacing delivery vehicles every 2 years. A number of delivery vehicles are due to be replaced under this policy in June at a cost of £1,250,000, but existing delivery vehicles will be traded in for £310,000 as part of the deal. Other overheads: Other overheads will be £2,200,000 per month settled on a monthly basis in the month incurred. Cash: Hamble Ltd expects to have £90,000 in cash at the beginning of April. You are required to: Using Excel, prepare a cash budget for the business for the 6-month period from April to September.
The directors of Royal Ltd have asked you, as a recently employed assistant
In addition, Royal Ltd requires you to evaluate the different funding options for its expansion plans.
Estimated sales and purchases for each of the nine months to September are given below:
|
|
Jan £,000 |
Feb £,000 |
Mar £,000 |
April £,000 |
May £,000 |
June £,000 |
July £,000 |
Aug £,000 |
Sept £,000 |
|
Credit sales |
2,500 |
4,000 |
3,000 |
16,000 |
11,350 |
18,000 |
14,250 |
7,500 |
12,500 |
|
Cash sales |
550 |
650 |
900 |
900 |
220 |
100 |
300 |
550 |
800 |
|
Credit purchases |
5,000 |
3,200 |
6,800 |
7,000 |
3,700 |
4,300 |
2,200 |
1,000 |
5,100 |
Trade Receivables: Credit sales are to be collected two months after the date they have been sold.
Trade Payables: Credit purchases are to be paid one month after the date they have been purchased.
Borrowings: The terms of a 5-year loan are coming to an end and Hamble Ltd are due to repay the capital of £5,000,000 on 31st July.
Current Liabilities: Corporation tax of £100,000 is due to be paid to HMRC in the month of May.
Delivery vehicles: Hamble Ltd has a policy of replacing delivery vehicles every 2 years. A number of delivery vehicles are due to be replaced under this policy in June at a cost of £1,250,000, but existing delivery vehicles will be traded in for £310,000 as part of the deal.
Other
Cash: Hamble Ltd expects to have £90,000 in cash at the beginning of April.
You are required to:
- Using Excel, prepare a cash budget for the business for the 6-month period from April to September.
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