The financial year master budget has been prepared for the new subsidiary Panda Pet Food Online which was originally established to deal with the surge in online sales following the Covid-19 pandemic. The online enterprise is budgeted to make a profit of just over $65,000 for the year. Sales for the Panda Pet Food Online business are expected to be as follows over the coming 2024 calendar year: Month ༔ ཧྲྰི སྠཽ ཎྜ །ཉྭ གཽ དྷྭ ཟ ཧྲྰི རྩི ཅུ ཌྷ ཚོ Jan 90,000 Feb 105,000 Mar 142,500 188,000 Apr May 200,000 Jun 295,000 120,000 Aug 135,000 Sep 172,000 Oct 178,000 Nov 142,000 140,000 Panda Pet Food Online cash collections are budgeted to be 60% in the month of sale, 25% in the month following sale, and 14% in the second month after sale. It is expected that 1% of sales revenue will not be collectable. Panda Pet Food Online pays for stock in the month it is sold and achieves an average mark up of 50% on cost price. Panda Online operates a just-in- time inventory system and has no carry forward inventory holdings. Other monthly expenses are as follows: Expense Warehouse Rent Wages Other Cost per month T 25,000 15,000 7,500 Panda Online expects to have cash on hand of $9,575 at the start of the calendar year. Sales for the months of November and December preceding the budget are expected to be $132,000 and $130,000 respectively. Required: 1. Using an Excel spreadsheet prepare a cash budget for Panda Online for the financial year. Ensure you use a data input section so that any changes can be made to the budget. 2. Discuss any issues or problems that you can identify from the cash budget for Panda Online management. 3. Your accounts receivables manager advises that she can implement a credit policy which will improve cash collection to 75% in the month of sale and 24% in the month following, with 1% unrecoverable. Using the flexible budget previously prepared alter the input section to reflect these changes. What difference will the new credit policy make to Panda Online's cash flows? Explain your answer.
The financial year master budget has been prepared for the new subsidiary Panda Pet Food Online which was originally established to deal with the surge in online sales following the Covid-19 pandemic. The online enterprise is budgeted to make a profit of just over $65,000 for the year. Sales for the Panda Pet Food Online business are expected to be as follows over the coming 2024 calendar year: Month ༔ ཧྲྰི སྠཽ ཎྜ །ཉྭ གཽ དྷྭ ཟ ཧྲྰི རྩི ཅུ ཌྷ ཚོ Jan 90,000 Feb 105,000 Mar 142,500 188,000 Apr May 200,000 Jun 295,000 120,000 Aug 135,000 Sep 172,000 Oct 178,000 Nov 142,000 140,000 Panda Pet Food Online cash collections are budgeted to be 60% in the month of sale, 25% in the month following sale, and 14% in the second month after sale. It is expected that 1% of sales revenue will not be collectable. Panda Pet Food Online pays for stock in the month it is sold and achieves an average mark up of 50% on cost price. Panda Online operates a just-in- time inventory system and has no carry forward inventory holdings. Other monthly expenses are as follows: Expense Warehouse Rent Wages Other Cost per month T 25,000 15,000 7,500 Panda Online expects to have cash on hand of $9,575 at the start of the calendar year. Sales for the months of November and December preceding the budget are expected to be $132,000 and $130,000 respectively. Required: 1. Using an Excel spreadsheet prepare a cash budget for Panda Online for the financial year. Ensure you use a data input section so that any changes can be made to the budget. 2. Discuss any issues or problems that you can identify from the cash budget for Panda Online management. 3. Your accounts receivables manager advises that she can implement a credit policy which will improve cash collection to 75% in the month of sale and 24% in the month following, with 1% unrecoverable. Using the flexible budget previously prepared alter the input section to reflect these changes. What difference will the new credit policy make to Panda Online's cash flows? Explain your answer.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:The financial year master budget has been prepared for the new subsidiary Panda Pet Food
Online which was originally established to deal with the surge in online sales following the
Covid-19 pandemic. The online enterprise is budgeted to make a profit of just over $65,000 for
the year. Sales for the Panda Pet Food Online business are expected to be as follows over the
coming 2024 calendar year:
Month
༔ ཧྲྰི སྠཽ ཎྜ །ཉྭ གཽ དྷྭ ཟ ཧྲྰི རྩི ཅུ ཌྷ ཚོ
Jan
90,000
Feb
105,000
Mar
142,500
188,000
Apr
May
200,000
Jun
295,000
120,000
Aug
135,000
Sep
172,000
Oct
178,000
Nov
142,000
140,000
Panda Pet Food Online cash collections are budgeted to be 60% in the month of sale, 25% in
the month following sale, and 14% in the second month after sale. It is expected that 1% of
sales revenue will not be collectable. Panda Pet Food Online pays for stock in the month it is
sold and achieves an average mark up of 50% on cost price. Panda Online operates a just-in-
time inventory system and has no carry forward inventory holdings. Other monthly expenses
are as follows:
Expense
Warehouse Rent
Wages
Other
Cost per month
T
25,000
15,000
7,500
Panda Online expects to have cash on hand of $9,575 at the start of the calendar year. Sales for
the months of November and December preceding the budget are expected to be $132,000
and $130,000 respectively.
Required:
1. Using an Excel spreadsheet prepare a cash budget for Panda Online for the financial
year. Ensure you use a data input section so that any changes can be made to the
budget.
2. Discuss any issues or problems that you can identify from the cash budget for Panda
Online management.
3. Your accounts receivables manager advises that she can implement a credit policy
which will improve cash collection to 75% in the month of sale and 24% in the month
following, with 1% unrecoverable. Using the flexible budget previously prepared alter
the input section to reflect these changes. What difference will the new credit policy
make to Panda Online's cash flows? Explain your answer.
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