Answer to Question #270639 in Management for Maika Togavuto

Question

The following information is available from the financial records of Albury Ltd:

 

April

Sale $72000

Purchase $42000

May

Sales 66000

Purchases 48000

June

Sales 60000

Purchases 36000

July

Sales 78000

Purchases 54000

 

Receipts from customers are normally 70 per cent in the month of sale, 20 per cent in the month following the sale, and 9 per cent on the second month following the sale. The balance is expected to be uncollectible.

Albury takes full advantage of the 2 per cent discount allowed on purchases paid for by the 10^th day of the following month.

 Purchases for August are budgeted at $60 000, and sales for August are forecast at $66 000.

Cash payments for expenses (other than purchases) are expected to be $14 400 for the month of August.

§ Albury cash balance on 1 August was $22 000.

Required

Prepare a cash budget for Albury for August that includes:

1.    Expected cash receipts during August.

2.    Expected cash payments during August.

3.    Expected cash balance on 31 August.

Answer 1

1) Expected cash receipts during August:

2) Expected cash payments during August

3) Expected cash balance on 31 August