The following information is available in the financial records of Tūī Ltd, a large retail shop: Actual Sales Purchases August $770,000 $350,000 September $690,000 $370,000 October $590,000 $480,000 November $830,000 $510,000 Budgeted Sales Purchases December $980,000 $540,000 Receipts from customers are normally 60% in the month of sale, 25% in the month following the sale, and 5% in the second month following the sale. The balance is expected to be uncollectible. Tūī Ltd pays for purchases in the following month. Cash payments during December (for expenses other than purchases) are expected to be $288,000. Any excess cash will be invested in short-term securities – these investments have to be made in multiples of $20,000. Any cash shortage will be borrowed from the Bank of Aotearoa in multiples of $5,000. Tūī Ltd's cash balance on 1 December was $22,000. Prepare a cash budget for Tūī Ltd for December. Make sure you include: i. The expected cash receipts during December. ii. The expected cash payments during December. iii. Any investing or financing activities. iv. The expected cash balance on 31 December.
The following information is available in the financial records of Tūī Ltd, a large retail shop:
|
Actual |
Sales |
Purchases |
|
August |
$770,000 |
$350,000 |
|
September |
$690,000 |
$370,000 |
|
October |
$590,000 |
$480,000 |
|
November |
$830,000 |
$510,000 |
|
Budgeted |
Sales |
Purchases |
|
December |
$980,000 |
$540,000 |
Receipts from customers are normally 60% in the month of sale, 25% in the month following the sale, and 5% in the second month following the sale. The balance is expected to be uncollectible.
Tūī Ltd pays for purchases in the following month.
Cash payments during December (for expenses other than purchases) are expected to be $288,000.
Any excess cash will be invested in short-term securities – these investments have to be made in multiples of $20,000. Any cash shortage will be borrowed from the Bank of Aotearoa in multiples of $5,000.
Tūī Ltd's cash balance on 1 December was $22,000.
Prepare a
i. The expected cash receipts during December.
ii. The expected cash payments during December.
iii. Any investing or financing activities.
iv. The expected cash balance on 31 December.
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