The Sino-Fizer Company is concerned about the cash flow of the company. They consulted you to prepare a cash budget for the 4 months ending 30 April 2019. The following sales figures are for the months of November 2018 to June 2019. The figures from January 2019 onward are estimated: Actual Sales: (in P.000) November 2018 60,000 December 2018 64,000 Forecasted Sales: January 2019 February 2019 March 2019 April 2019 May 2019 65.000 70,000 72,500 76,250 80,000 June 2019 78,750 other information: a) Historical cash collections is as follows: 65% of sales is collected in the month of sale. 25% of sales is collected in the month following the sale. 8% of sales is collected in the second month following the sale. 2% of sales is uncollectible b) Goods are sold at a mark-up of 60% on the goods purchased one month before sale. Half of the purchases are paid for in the month of purchase and the remainder is paid in full in the following month. Wages of P12.000 per month are paid in the month in which they are earned. c) d) Rent will cost P60.000 per annum payable in three monthly advance payments in January. April, July and December each year. e) The directors have arranged a bank loan of P60,000 which would be credited to company's current account in February 2019. ) The half-yearly interest on P200,000, 8% debentures of Pl each is due to be paid on 15 January 2019. g) The ordinary dividend of P12.000 for the year 2018 will be paid in March 2019. h) The bank balance at 31 December 2018 is P12.000 and is to be maintained every month. (! A stand-by credit line is available should the need arise at 10% discounted interest.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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MAKE A CASH BUDGET

The Sino-Fizer Company is concerned about the cash flow of the company. They consulted you to
prepare a cash budget for the 4 months ending 30 April 2019. The following sales figures are for the
months of November 2018 to June 2019. The figures from January 2019 onward are estimated:
Actual Sales: (in P ,000)
November 2018
December 2018
60,000
64,000
Forecasted Sales:
January 2019
February 2019
March 2019
April 2019
May 2019
65,000
70,000
72,500
76,250
80,000
June 2019
78,750
Other information:
a) Historical cash collections is as follows:
65% of sales is collected in the month of sale.
25% of sales is collected in the month following the sale.
8% of sales is collected in the second month following the sale.
2% of sales is uncollectible
b)
Goods are sold at a mark-up of 60% on the goods purchased one month before sale. Half of
the purchases are paid for in the month of purchase and the remainder is paid in full in the
following month.
Wages of P12,000 per month are paid in the month in which they are earned.
d)
Rent will cost P60,000 per annum payabie in three monthly advance payments in January,
April, July and December each year.
e)
The directors have arranged a bank loan of P60,000 which would be credited to
company's current account in February 2019.
f)
The half-yearly interest on P200,000, 8% debentures of Pl each is due to be paid on 15 January
2019.
g)
The ordinary dividend of P12,000 for the year 2018 will be paid in March 2019.
h)
The bank balance at 31 December 2018 is P12,000 and is to be maintained every month.
A stand-by credit line is available should the need arise at 10% discounted interest.
i)

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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